Posts Tagged ‘30 year-fixed mortgage’
Everything you should know about 15 and 30 years fixed home mortgage
Discussions of mortgages often focus on interest rates, but there is a much more basic decision to make. Should you go with a 30 year mortgage term or a 15 year mortgage term?
30 year-fixed mortgage vs. 15 Year Mortgages
Most discussion of mortgage loans will turn to two aspects. How can you qualify for the most money with the lowest payment? What is the best way to get the lowest rate for a mortgage? While these are two important issues, there is an addition one that people fail to consider, resulting in significant wasted money.
There is a couple of reason that the term of the mortgage is important. First, it dictates the length of the mortgage term you are borrowing. Second, it defines the amount of interest you are going to pay over the life of the loan. When it comes to building equity these are important issues.
The longer the loan, the more total interest you are going to pay. The trade off, of course, is you are going to have smaller monthly payments the farther you stretch out the obligation. While this might seem like a good plan when you initially get the mortgage, it can come back to hunt you down the road.
Most people look at interest rates as the only way to save money on mortgage loan. Although this approach is ok, but changing the term of the mortgage loan is an even better way for you to save money. If you decide to go with the shorter loan, you will have save more than save in interest payment.
The decision on the term of the loan is relatively simple, but entirely dependent upon your personal situation. There is no absolutely correct choice. First, you need to determine if you can comfortably afford the higher payments that come with a shorter term loan. In general, payments on a 15 year mortgage loan will be 20-25% higher than a 30 year mortgage. Of course, you will pay the loan off faster, to wit, be building equity in the home quicker.
The modern mortgage industry has a variety of different term length products. When applying for a loan, take the time to evaluate the different terms to see if you can find a loan that is perfect for your situation.
This article was written with the help of the staff at Los Angeles Mortgage and Chicago Mortgage . For a more in depth discussion about this topic or other related topics please visit the mortgage forum.