By extending payment over 30 years, you keep your monthly housing costs low. During the term of your loan, you will pay back your mortgage by making regular monthly payments of principal and interest. In the early years of your loan, most of the money you pay will be for the interest you owe. Toward the end of the term of your loan, you will be paying primarily principal. This type of repayment method is called amortization.
Some mortgages have an interest rate that is fixed for the entire term of the loan.
One advantage of a fixed-rate loan is that you know your interest rate will never change over the term of your loan. The interest rate with an ARM may increase or decrease based on market interest rates. Consequently, your mortgage payments may go up or down. The down payment is the part of the purchase price that the buyer pays in cash and does not finance with a mortgage. The larger your down payment, the less you will need to borrow.