FIXED-RATE MORTGAGES

The Most Popular Type of Mortgage Loan

The most common type of mortgage loans are fixed-rate mortgages for 15-year and 30-year periods.

Lock in the Interest Rate for the Life of the Loan

If you have started looking into the different types of home loans, you have most likely read about fixed-rate mortgages. They are the most common type of mortgage available when financing a home purchase. SouthState offers multiple fixed rate amortization periods, the most frequently used are 15-year and 30-year rate terms.
When choosing a fixed interest rate mortgage, you are choosing to lock in the interest rate for the life of the loan. A fixed interest rate means that your monthly payment will not change with market fluctuations. This is a solid choice if you plan to stay in your home for an extended period of time. If you plan to move out of your home within seven years, an adjustable rate mortgage may be a better option for you.
You might wonder what the big difference between the 30 and the 15-year fixed-rate mortgage is. A 15-year loan offers all the advantages of the 30-year loan, plus a lower interest rate—and you’ll pay off your loan twice as fast. Sounds great, right? However, with a 15-year loan, you commit to a higher monthly payment. What we see many of our customers do is opt for a 30-year fixed-rate loan and voluntarily make larger payments so they will pay off their loan in 15 years.
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30-Year Fixed Rate Mortgage

Advantages:

  • Offers the chance to borrow money on a long-term basis without having to worry about the interest rates or payments changing.
  • Monthly payments are lower than those on 15-year loans because the interest is amortized over a longer period. (Because the term of the loan is longer)
  • Lower monthly payments free up money that borrowers can pour into investments that could potentially yield more than their homes.
  • Higher interest payment increases the amount consumers can deduct at tax time, potentially reducing their federal income tax liabilities.1

Disadvantages:

  • Borrowers build equity at a very slow pace because payments during the first several years go largely toward interest rather than principal.
  • The amount of interest paid on the loan is higher due to the term of the loan being longer.
  • The interest rates are higher than on 15-year loans.

15-Year Fixed Rate Mortgage

Advantages:

  • Borrowers build equity much more quickly due to shorter amortization schedules.
  • Overall interest payments are dramatically lower than those on longer-term loans.
  • The interest rates are lower than 30-year loans.

Disadvantages:

  • Monthly payments will be higher than those on 30-year loans.

30-Year Fixed Rate Mortgage

Advantages:

  • Offers the chance to borrow money on a long-term basis without having to worry about the interest rates or payments changing.
  • Monthly payments are lower than those on 15-year loans because the interest is amortized over a longer period. (Because the term of the loan is longer)
  • Lower monthly payments free up money that borrowers can pour into investments that could potentially yield more than their homes.
  • Higher interest payment increases the amount consumers can deduct at tax time, potentially reducing their federal income tax liabilities.1

Disadvantages:

  • Borrowers build equity at a very slow pace because payments during the first several years go largely toward interest rather than principal.
  • The amount of interest paid on the loan is higher due to the term of the loan being longer.
  • The interest rates are higher than on 15-year loans.

15-Year Fixed Rate Mortgage

Advantages:

  • Borrowers build equity much more quickly due to shorter amortization schedules.
  • Overall interest payments are dramatically lower than those on longer-term loans.
  • The interest rates are lower than 30-year loans.

Disadvantages:

  • Monthly payments will be higher than those on 30-year loans.

  • All loans subject to credit approval.
  1. Consult your tax advisor concerning tax deductibility.

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