What is a 20 Year Mortgage Rate?
A 20-year mortgage rate is a loan repaid over a 20 year term. Each monthly payment you make covers the previous month’s interest charge and the remaining is used to reduce your mortgage balance. With every payment, less money is needed for interest and more of your monthly payment goes to paying off your loan. If you get a 20 year "fixed" mortgage it will protect you from increased interest rates and your monthly payments will remain the same amount each month until your loan is paid off.
The monthly payments on a 15 year loan is higher than the payments on a 20-year loan and the interest on a 30 year loan is higher than on a 20 year loan. This leaves the 20 year loan right in the middle. If you’re looking for a compromise, the 20 year fixed rate mortgage might be for you. Ultimately you will pay less than you would with a 30 year mortgage, but more than you would with a 15 year home loan. However, with a 20 year loan there are no prepayment fines. This means you can pay your 20 year loan in 15 years by making additional payments every month. With a 20 year loan, your payments and total interest expense will be falling somewhere in between the 15 and 30 year loans. A 15 year loan can put financial stress on you because higher amounts will be needed every month and a 30 year loan is often undesirable because paying a loan for 30 years is discouraging to many, leaveing the 20 year mortgage rates option more suitable for some people.
Things to Consider when Getting a 20 year Loan
There is a lot to consider when deciding if you should take on a 20 year loan or not. You should first determine how much your monthly income is so you will know if you will have enough funds to meet the payments each month. It can be very stressful if you calculate this wrong, and are stuck with payments that you can't comfortably meet. Consider your income and all monthly payment responsibilities you may have. Financial institutions can help you determine what you can afford. You should visit several lending institutions before getting your 20 year loan to find out what each has to offer. Rates will vary from one bank to another and comparing will get you the best deal.
Before being granted the loan, you are required to have a deposit. There is a minimum amount that varies with each bank. You can deposit more than the minimum and the more you deposit the lower monthly payments you will have.
When getting a loan, you should also be aware that in the event of your death you could easily lose your house to the lenders. The bank is the owner of the house until you pay it off and will sell it to make up for their lost profit in such an event. By getting home credit insurance, you can avoid this unfortunate situation. The home credit insurance will ensure you will not lose your house when you are no longer able to make the monthly payments. The insurer will take over the loan repayments. This is a great way of securing your home for your family in the event of your death before paying off your home loan.
Getting a 20 Year Loan
Finding a 20 year loan is more difficult than finding 15 or 30 year loans. A good way to find a 20 year loan is shopping online. Shopping online can make it easier to contact more lenders and compare quotes for more 20 year home loans
Learn more about Florida mortgages by visiting First Nationwide Lending.