What Is a 30 Year Variable Mortgage?
Mortgages differ in length, interest rates and other stipulations. A 30-year variable mortgage, is one where you have 30 years to pay the loan, during which time the interest rate can fluctuate.
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Time Frame
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Interest-rate changes can take place annually or every few years. Typically, changes are based on a published interest rate, which is determined by the Department of the Treasury.
Features
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A longer-term loan typically means lower monthly payments, but you may pay more in interest over the course of the loan or at the end of the loan period.
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Function
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Banks and other lending institutions front the cost of the home and allow you to make monthly payments until the loan is paid off. The bank charges interest on the loan, so you will pay more than the cost of the home by the end of the term.
Other Types
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Mortgage terms vary from borrower to borrower. While many mortgages are for 30 years, the term of the loan can be as short as 10 years.
Considerations
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The interest rate on the 30-year variable mortgage may go up for an extended period of time due to the interest index. However, most loan terms include a cap--or a limit--that the interest rate cannot exceed.
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