30-year fixed-rate mortgages in New Jersey
The housing market in New Jersey is competitive. It’s one of the US’s most densely populated states. If you are lucky enough to be able to meet the down payments and get accepted for a mortgage you’ll then have one more decision to make, how long do you want your repayments to be? In most cases the standard choice is between 15 years or a 30-year fixed rate mortgage. The differences aren’t dramatic but they can make a dramatic difference to your finances.
What is a 30-year fixed-rate mortgage?
As the name suggests a 30-year fixed-rate mortgage indicates the length of time your mortgage will take to repay as well as the type of interest you will be charged on the loan. In this case it is a fixed rate. This type of mortgage is one of the most popular types around. As property markets become more and more competitive in more densely populated areas, such as New Jersey, longer-term mortgages are becoming more attractive, so it is not uncommon to hear of people taking out 40 or even 50-year mortgages.
A fixed-rate mortgage is often a little more expensive over the longer-term than a variable-rate mortgage but it comes with the security of knowing exactly what the rate of interest you will be paying back for the foreseeable future will be.
How are the repayments calculated?
Like most standard mortgages, repayments, including interest, will be made every month. The rate of interest is obviously the key negotiating point here and is arranged in advance with the lender. If interest rates are currently low you might be able to negotiate a low repayment rate, which you can then carry with you over the next three decades, no matter the changes in the housing market. Of course, the downside to this is if you were to arrange a fixed interest rate prior to rates falling significantly, you could be left with very expensive repayments.
What if I want to change to an adjustable-rate mortgage?
In the case where you are left repaying a mortgage with very high interest rates you might decide to switch to an adjustable or variable-rate mortgage. This is easy enough to do, but it does comes with some costs. The first thing you will have to do is refinance your house. To do this you will have to spend a few thousand pounds in closing costs. Once this has been done and you’ve completed all the necessary admin you can then switch to the variable rate, although you might not get the lowest possible rate at first.
Be warned though, refinancing a property can be a very complicated and often risky decision. If you have a good credit rating and equity on your house then there is money to be made from refinancing. However, if you’re doing it as a last resort due to a bad credit history, it is possible you will wind up in a worse situation than you were in to begin with. Make sure you carry out plenty of research in advance and have sought the best possible advice available.
What are the advantages?
Benefits of these mortgages include:
- A fixed-rate of repayments over the entire course of your mortgage.
- No early repayment fees so borrowers are free to change lender or move home without incurring costs.
- Borrowers are protected from sudden changes in the property market.
What are the disadvantages?
There are a few downsides to taking out a fixed-rate mortgage which borrowers should also be aware of. These include:
- Borrowers can’t easily change their interest rate, even when rates decline.
- Fixed-rate mortgages often lack variety with conditions remaining similar from lender to lender.
- Borrowers won’t be able to benefit from the low initial rate that are offered with adjustable-rate mortgages.
- Usually fixed-rate mortgages have a higher overall cost.
Is it right for me?
Like any loan a good deal of thought should be put into deciding whether it is the right time to apply. The first thing you need to decide is how much money you can afford, right now, to pay back on a monthly basis. One of the benefits of an adjustable mortgage is that you generally pay less money now, but more in the future as rates start to rise. What will your finances be like in a few years? Will they have improved significantly? If so, then an adjustable-rate mortgage might be for you. If interest rates are currently low and 15-year mortgage rates would be too high, then a 30-year fixed-rate mortgage might be the right road to go down.
Am I eligible?
Eligibility will come down to your credit rating and how much money you are earning at the moment. While this is always a little difficult for people who don’t have the world’s greatest financial history, there are always, occasionally, ways around it. A simple rule to follow is that most lenders will not grant you a loan if your mortgage repayments are more than 28 per cent of your gross income. This percentage can be higher if your credit rating is particularly good.
Why choose us?
At SimpleFastMortgage.com we take pride in offering people the best advice on fixed-rate or adjustable-rate mortgages. Choosing the right mortgage for you and your family is crucial and can affect you for years to come. We have decades of experience and tailor our advice based on each individual customer’s situation, not on what’s best for us. We know that taking out a mortgage is a serious business and we’re serious about finding you the best price for the best New Jersey property. We will give you all the information you need to make the best decision for you.
If you have any questions on fixed or variable-rate mortgages, or simply need some advice on what your next move should be, please get in touch and we’ll be happy to help answer any of your questions.