With a 20-year fixed-rate mortgage, you build up equity in your home more quickly and save quite a bit of interest over the life of your loan. As with all fixed-rate mortgages, the interest on your loan never changes, bringing you peace of mind that your principal and interest payments will remain level over time. However, higher monthly mortgage payments may make it more difficult to qualify for compared to the 30-year fixed-rate mortgage.
– You pay less interest over the life of your loan, compared to a 30-year fixed rate mortgage. For example, on a $100,000 loan at 8.25 percent interest, the 20-year fixed rate mortgage can save you over $65,000 in interest payments when compared to a 30-year mortgage.
– Interest rate payments in the early years of the mortgage are comparable to a 30-year mortgage, allowing for a sizable mortgage interest tax deduction.
– Your monthly payments are significantly less than for a 15-year mortgage, allowing you a greater chance to qualify for this type of mortgage.
Eligible properties include one- to four-family, owner-occupied principal residences; second homes and investment properties; and condos, co-ops, and planned unit developments. Manufactured homes are also eligible. (Manufactured housing units must be built on a permanent chassis at a factory and then transported to a permanent site and attached to a foundation.)