Twenty-Year Fixed-Rate Mortgages Ease Budgets

by Joe Taylor Jr.
CMR Columnist

While you might be familiar with the fifteen-year mortgage and the thirty-year mortgage, there are now other home loans available. Today's rising interest rates have spurred more lenders to offer a twenty-year fixed-rate mortgage product for discerning borrowers. This relatively unusual mortgage offering allows a significant opportunity to either save money or preserve cash flow, depending on a homeowner's personal budget.

When using a home mortgage calculator to estimate monthly payments, try plugging twenty years into the mortgage term to see what happens to your figures. Many people can save a significant amount of money in interest payments by shifting a thirty-year mortgage to a twenty-year home loan.

On the other hand, a home mortgage calculator can show you how adding five more years to a fifteen-year fixed-rate mortgage can reduce your monthly payment. Though the extra time means paying a little more interest, you'll still save more than you would with a thirty-year fixed-rate mortgage, even if the longer-term loan offers a lower rate.

Home Mortgage Calculators Can Tip You Off to Fraud

Because twenty-year fixed-rate mortgages are still somewhat uncommon, experts suggest that you ask potential lenders to walk you through a scenario using a home mortgage calculator. Consumer advocates point out that some predatory lenders have marketed bogus home loans by bundling a high-interest five-year loan with a fifteen-year mortgage right behind it. Only a true, twenty-year fixed-rate mortgage will provide the savings you deserve.

Bring the results of your home mortgage calculator to meetings with potential lenders. Eager to win your business, most loan underwriters will be happy to provide a quote on a twenty-year fixed-rate mortgage. In fact, since the two-decade term often holds less risk, you can usually find a mortgage lender that's more than happy to make you a good deal.

Sources
Clark Howard
Inner City Press
United States Dept. of Housing and Urban Development

About the Author
Joe Taylor Jr. coaches beginning mortgage brokers to provide better customer service and to understand creative financing opportunities.

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