Do you need to secure financing for a home, and you've reached the point where you need to decide on a 15 year or a 30 year mortgage? If so, it may help to know the following things about these real estate loan lending options to choose from:
Why Get A 30 Year Mortgage
The biggest advantage to getting a 30 year mortgage is that it is going to have the lowest monthly payment possible. Since that loan is spread out over 30 years, it can help bring down that recurring monthly payment so that it is as affordable as possible. This may be important to you if your income is low and you are worried about the monthly payment in the future.
However, that 30 year loan also means that you are going to pay a lot more in interest. Even though mortgages have very low-interest rates, you'll end up spending more for your home over the years by stretching out those mortgage payments. This may be a concern to you if you plan on living in the home for a very long time since the majority of the monthly mortgage payments at first are interest rather than principal.
One of the nice things about 30 years mortgages is that you can always make additional principal payments. This will reduce the amount of money that you owe toward the home and not go toward interest, which actually shortens the length of the loan and how much interest you end up paying.
Why Get A 15 Year Mortgage
A 15 year mortgage is going to have a higher monthly payment than a 30 year loan, but it is not going to be twice as much. This is because the interest that you are paying is often based on a lower interest rate, and you are paying interest over a shorter period of time. You may be surprised to see that the monthly payment is still affordable with your budget.
If you are concerned about that monthly payment someday being too much, know that you always have the option to refinance. You can change your loan from a 15 year to a 30 year if necessary, which will give you lower payments.
Of course, you also have the option to make additional monthly payments and pay off your loan even faster if you choose to do so. This may be something you are interested in as you find more success in your career and get paid more money.
Share22 February 2022
When it comes to borrowing cash for a new house or a nice car, how much money do you really need? Although you might be tempted to mortgage yourself to the brim or borrow a little more than you should, the fact of the matter is that everyone has financial limits. My blog discusses the impact of borrowing more than you need, so that you can make smarter decisions with your money. In addition to keeping you out of trouble, this valuable information might also improve your quality of life and protect your financial future. You never know, it could make all the difference.
