Of all of the mortgage products out there, the 30–year, fixed–rate mortgage reigns as the most popular.
It's been the favorite for years for several reasons:
- With a longer–term mortgage, monthly payments are smaller, making them more affordable.
- You pay the same amount every month for the life of the loan. You won't experience the financial shock that many homeowners feel when the interest rates on their adjustable-rate mortgages (ARMs) are reset. For example, some homebuyers who took out certain types of ARMs during the housing boom had their monthly payments skyrocket as much as 165% after the reset a few years later. And many people had trouble refinancing ARMs.
- You can refinance or pay off the mortgage at any time without penalty.
The 30–year, fixed–rate mortgage not only helps make homeownership possible and sustainable for more people, but also helps keep communities stable. Some proof: During the recent economic crisis, home prices fell the least in markets where the most borrowers took out fixed–rate mortgages.
Of course, different homebuyers have different needs. That's why a range of mortgage products are available. Go to My Home by Freddie Mac® to learn about various mortgage products — including the 30–year fixed–rate mortgage — and how to find the right one for you.
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