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30 Year Fixed Rate vs 15 Year Fixed Rate Loans

30 Year Fixed Rate Mortgage vs 15 Year Fixed Rate Mortgage 

Table of Contents

Conventional Loans:  Calabasas, Topanga, Woodland Hills

30 Year Fixed Rate Loans vs. 15 Year Fixed Rate Loans: The Fully Amortized Loans

Fixed Rate Mortgage — A home loan with an interest rate that will remain at a specific rate for the term of the loan. At Bankers Group, our 30 year fixed rate mortgage and 15 year fixed rate mortgage are fully amortized conventional loans.

Amortized means by the end of the term, the loan will be completely paid off. Common amortized loans are car loans, mortgages and small personal loans from the bank to consolidate debt. Each of these loans schedule periodic payments that are applied to both principal and interest. An amortized loan payment first pays off the relevant interest expense for the period, after which the remainder of the payment reduces the principal.

According to Ellie Mae’s Monthly Origination Overview for closed loans for September 2019, about 71 percent of all closed loans were conventional loans. Of all those closed loans, 55 percent were refinance mortgages and 45 percent were purchase mortgages.

For a conventional home loans package, rates and terms, loan to values and underwriting guidelines, contact:

Dorothy Reik
President
Bankers Group
Cell: 310-291-1300 (call or text)
Home: 310-455-4050 
Office: 818-226-6100
dorothy@bankersgroup.us
CalBRE Lic #01233829 
NMLS Bankers Group ID #294230 
(B&P 10140.6(b); Regulation 2773).

Bankers Group is located at 5311 Topanga Canyon Blvd Suite 201, Woodland Hills, CA 91364.

Bankers Group works with homebuyers on conventional home loans in Topanga, Woodland Hills, Calabasas, Malibu, Pacific Palisades, Santa Monica, Venice, Brentwood, Westwood, Beverly Hills, West Hollywood, North Hollywood, Valley Village, Encino, Van Nuys, Sherman Oaks, Reseda, West Hills, Canoga Park, Chatsworth, Agoura Hills, Thousand Oaks, Sylmar and the greater Los Angeles area.


Conventional Loans: 30 Year Fixed Rate Loan Requirements

So you want to own a home? The average FICO credit score for all closed conventional loans purchases in September 2019 was 754, debt-to-income (DTI) ratio was 23/35 and Loan To Value (LTV) was 80 percent, according to the most recent statistics for conventional loans from Ellie Mae.

These are typical conventional loan requirement thresholds.

Conventional loan lenders tend to want to see a strong credit score, low DTI and no more than 80 percent LTV, or in other words at least a 20 percent down payment.

Back End Ratio, or Debt-to-Income Ratio (DTI)

Debt-to-Income Ratio, DTI, or also known as the back end ratio, means your personal finance measure that compares your debt payments to the income you generate. This includes front-end ratio/back-end ratio.

Front End Ratio, or Mortgage-to-Income Ratio

The front-end ratio, also known as the mortgage-to-income ratio, is a ratio indicating what portion of your income is allocated to mortgage payments. The front-end ratio is calculated by dividing your anticipated monthly mortgage payment by your monthly gross income. The mortgage payment generally consists of principal, interest, taxes, and mortgage insurance (PITI). Lenders use the front-end ratio in conjunction with the back-end ratio, or DTI, to determine how much to lend.

Loan-to-Value Ratio (LTV)

A lending risk-assessment ratio that financial institutions and other lenders examine before approving a mortgage. It is calculated by dividing the mortgage amount by the appraised value of the property.

For a conventional home loans package, rates and terms, loan to values and underwriting guidelines, contact

Dorothy Reik
President
Bankers Group
Cell: 310-291-1300 (call or text)
Home: 310-455-4050 
Office: 818-226-6100
dorothy@bankersgroup.us
CalBRE Lic #01233829 
NMLS Bankers Group ID #294230 
(B&P 10140.6(b); Regulation 2773).

Bankers Group is located at 5311 Topanga Canyon Blvd Suite 201, Woodland Hills, CA 91364.

Bankers Group works with homebuyers on conventional home loans in Topanga, Woodland Hills, Calabasas, Malibu, Pacific Palisades, Santa Monica, Venice, Brentwood, Westwood, Beverly Hills, West Hollywood, North Hollywood, Valley Village, Encino, Van Nuys, Sherman Oaks, Reseda, West Hills, Canoga Park, Chatsworth, Agoura Hills, Thousand Oaks, Sylmar, Oxnard and the greater Los Angeles area.


Benefits of 30 Year Fixed Rate Loans

The benefits of 30 year fixed rate loans are many.  This loan is the American pie of the mortgage industry, the granddaddy of all loans. It’s been around since the creation of the FHA in the 1930s.

  1. The main advantage of the 30 year fixed rate loan is the relatively low monthly payment. Much like the Baby Boomer generation, Millennials have the same advantages of the 30 year fixed rate fully amortized loans at their fingertips. First time homebuyers have taken this path to homeownership with much success. Now this new generation of homebuyers can apply online for the home of their dreams.
  2. A fully amortized loan means it will be fully repaid, interest and principal, by a series of regular payments that are equal or nearly equal, without any special balloon payment prior to maturity. This is also called a Level Payments Loan.
  3. The lower payments may allow a borrower to buy more house than they would be able to afford with a 15-year loan since the same monthly payment would allow the borrower to take out a larger loan over 30 years.
  4. The lower payment allows a borrower to build up savings over that 30 year period.
  5. The lower payment frees up funds for other goals over 30 years.

The downside of a 30 year fixed rate loan as compared to the 15 year fixed rate loan is you’ll pay more interest.

For a conventional home loans package, rates and terms, loan to values and underwriting guidelines, contact:

Dorothy Reik
President
Bankers Group
Cell: 310-291-1300 (call or text)
Home: 310-455-4050 
Office: 818-226-6100
dorothy@bankersgroup.us
CalBRE Lic #01233829 
NMLS Bankers Group ID #294230 
(B&P 10140.6(b); Regulation 2773).

Bankers Group is located at 5311 Topanga Canyon Blvd Suite 201, Woodland Hills, CA 91364.

Bankers Group works with homebuyers on conventional home loans in Topanga, Woodland Hills, Calabasas, Malibu, Pacific Palisades, Santa Monica, Venice, Brentwood, Westwood, Beverly Hills, West Hollywood, North Hollywood, Valley Village, Encino, Van Nuys, Sherman Oaks, Reseda, West Hills, Canoga Park, Chatsworth, Agoura Hills, Thousand Oaks, Sylmar, Oxnard and the greater Los Angeles area.

15 Year Fixed Rate Mortgage

The Grandma of the mortgage loan industry, the 15 year fixed rate fully amortized loan has plenty of its own advantages. This mortgage has also been around since the creation of the FHA in the 1930s. The one commonality these two loan structures have in common is they’re both fixed rates. This means the interest rate remains stable, or fixed, throughout the life of the loan.

The Benefits of the 15 Year Fixed Rate Loan

  1. The shorter repayment period of 15 instead of 30 years means you’ll pay less interest over the life of he loan and thus less money overall.
  2. The 15 year fixed rate mortgage is also an amortization loan. Amortization involves paying off both interest and principal amounts with each payment. In other words, this is another level payments loan where the entire balance will be paid off at the end of the life of the loan. The 15 year fixed rate loan is paid in a series of equal or nearly payments comprised of principle, interest, taxes and mortgage insurance (PITI) until the entire loan is a zero balance.
  3. A 15 year fixed rate loan also means your’ll own your home sooner, and that’s the goal, homeownership.
  4. You’ll build more equity faster.

On the downside, you’ll lose some tax advantages, as compared to other mortgage structures, and have a higher monthly payment with a 15 year fixed rate loan.


Contact Us Today

For a conventional home loans package, rates and terms, loan to values and underwriting guidelines, contact:

Dorothy Reik
President
Bankers Group
Cell: 310-291-1300 (call or text)
Home: 310-455-4050 
Office: 818-226-6100
dorothy@bankersgroup.us
CalBRE Lic #01233829 
NMLS Bankers Group ID #294230 
(B&P 10140.6(b); Regulation 2773).

Bankers Group is located at 5311 Topanga Canyon Blvd Suite 201, Woodland Hills, CA 91364.

Bankers Group works with homebuyers on conventional home loansTopanga, Woodland Hills, Calabasas, Malibu, Pacific Palisades, Santa Monica, Venice, Brentwood, Westwood, Beverly Hills, West Hollywood, North Hollywood, Valley Village, Encino, Van Nuys, Sherman Oaks, Reseda, West Hills, Canoga Park, Agoura Hills, Thousand Oaks, Chatsworth, Burbank, Oxnard, Sylmar and the greater Los Angeles area.