A 30 year fixed rate mortgage is still the most popular mortgage loan. Most borrowers feel comfortable with the fact that the interest rate does not change, the payment does not change, and the loan is paid off in 30 years. Of course very few people ever hold on to their 30 year mortgage for the entire term. Historically, a 30 year mortgage becomes even more popular when interest rates are low.
Although still very popular, in recent years the 30yearfixed has given way to a number of Adjustable Rate Mortgage loans or ARMs as they are known. The ARMs offer the borrower greater payment flexability, at least for the short term .Traditionally, 30Year, fixed rate mortgages were established after the depression to help America establish home ownership. The 30years were based on the average age of retirement and employment history. The average American retired at the age of 60 with a fixed income pension. The timing of the mortgage payoff coincided with retirement. Because modern employment, retirement savings, length of ownership and cost of living has changed drastically since the establishment of fixed rate mortgages, modern mortgages such as adjustable rate mortgages or hybrids allow Americans to strategically achieve home ownership in a much changing environment.
When you look at the average time a person has their mortgage in place before refinancing or selling the home, the 30 year fixed is not always the best choice. A person needs to take into consideration several factors such as how long before they move up or move down and length of time before needing to refinance for college funds etc... when looking at what program is best suited or their situation.
