30 Year Fixed Rate Mortgage Information
- A 30-year, fixed-rate mortgage is usually in first lien position in order to buy or refinance a home. The lien position represents the order in which the lender is paid in a case where the borrower defaults on the loan. So, in a first lien position, the mortgage lender of the 30-year, fixed-rate mortgage would be paid before any liens in second or third position.
- Whether or not the interest rate for a 30-year, fixed-rate mortgage is lower than other fixed-rate mortgages depends. Interest rates for mortgages are determined by myriad factors, but mortgage interest rates tend to fluctuate with movement in the U.S. Treasury bond market. When bond rates go up, mortgage rates tend to go down and when bond rates go down, mortgage interest rates tend to go up. Even in situations where a 30-year fixed rate mortgage has a higher interest rate than a 15-year fixed rate mortgage, the payment on a 30-year mortgage is lower than a 15-year mortgage because you have a longer period to pay back the loan.
- The term of a mortgage is the number of years the loan is being financed. In the case of a 30-year, fixed-rate mortgage, the term for the mortgage is 30 years. At the end of the 30 years, the mortgage balance will be completely paid off, as long as the borrower has made monthly payments throughout the entire term of the mortgage.
- A 30-year fixed-rate mortgage is funded in a lump sum amount to fund the purchase or refinance of the home. Borrowers for a 30-year fixed-rate mortgage begin paying principal and interest payments on the full mortgage amount, based on the interest rate.
- A 30-year, fixed-rate mortgage is a fully amortizing loan, which means that the borrower is paying principal and interest payments on a monthly basis. An amortized loan is calculated so that when the end of the term is reach, which in this case is 30 years, the mortgage balance at the end of the term is zero. A non-amortizing loan, such as an interest only mortgage calculates the required monthly mortgage payments to cover only the interest on the mortgage, which means the principal balance of the mortgage is not being reduced. Without reducing the principal balance, the loan will not be paid off at the end of the term. What typically happens is at the end of the term of a non-amortizing mortgage, the lender requires borrowers to pay off the balance in a lump sum.
