The rate of mortgage interest is typically associated with the duration of the mortgage, so one way to get a lower interest rate is to take out a shorter home loan. For example, standard 30-year fixed-rate mortgages typically charge a higher interest rate than 15-year fixed-rate mortgages. Not only is the interest rate higher, but the total amount of interest charged will be significantly more since repayment takes place over 360 months rather than 180 months. Of course, by spreading out the mortgage over 30 years instead of 15, the monthly payment is substantially less.
First, determine what you can afford. Depending upon your credit you may qualify for a variety of different rates and terms, so it pays to compare mortgage brokers and different offers. Ask what fixed-rate mortgage rates are available for different terms: 30, 20, 15 and 10 years.
After determining how much you can afford and comparing the different rates available, you are now in a position to select the best mortgage for your budget. Remember, if your income isn’t secure then it might be a good idea to select the longer term and make additional monthly payments. The longer term allows you the flexibility to remain current with your payments or even pay ahead without forcing you into payments you may not be able to afford in the long run.