Pros and Cons of a 30-Year Fixed-Rate Mortgage

Thinking about getting a 30-year fixed-rate mortgage? Good idea. This granddaddy of all mortgages is the choice of nearly nine out of every 10 home buyers.

It’s no mystery why 30-year fixed-rate mortgages are so popular. The long repayment period keeps monthly payments lower, and the fixed rate means homeowners can count on consistent payments no matter what — although taxes and insurance premiums may change.

Here’s a quick look at the benefits — and some drawbacks — of this popular mortgage.

» MORE: Calculate how much home you can afford with a 30-year mortgage

What is a 30-year fixed-rate mortgage?

A 30-year mortgage is a home loan that will be paid off completely in 30 years if you make every payment as scheduled.

Most 30-year mortgages have a fixed rate, meaning that the interest rate and the payments stay the same for as long as you keep the mortgage.

Advantages of a 30-year mortgage

Lower payment

A 30-year term allows for a more affordable monthly payment by stretching out the repayment of the loan over a long period.

Flexibility

You can pay off the loan faster by adding to your monthly payment or making extra payments, which reduces interest over time, while still having the flexibility to fall back on the smaller payment as needed.

Predictability

It’s nice to count on your mortgage payment staying the same, no matter how stormy the economy gets or how high the interest rates climb, making long-term financial planning easier.

More house for the mortgage

Lower payments mean you could qualify for a more expensive home.

Bigger tax deduction

Current tax laws let home buyers deduct mortgage interest from their taxes. In the early years of a loan, most of your mortgage payments go toward paying off interest, making for a meaty tax deduction.

» MORE: Review the best 30-year fixed mortgage lenders