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Deciding Between 15 And 30 Year Mortgages
By Billy | August 31, 2010
Choosing the right mortgage depends a lot on interest rates, but before that, you need to make a bigger decision. Is it better to go with a 15 year or a 30 year mortgage term?
Comparing 15 and 30 Year Mortgages
Most people consider two things when debating on mortgage policies. Which policy would give you more money in the long run and have you paying less? Among these options, which has the lowest interest rate? But failing to consider the term of a mortgage could result in money lost, regardless of the interest rates you have to pay.
There are several reasons why the term of a mortgage is so important. The most basic reason would be because this would set the length of your obligation. Secondly, the length of your term would determine the amount of interest you will be paying for the entire term. Never neglect these things when choosing a mortgage policy.
30 year mortgage terms mean more total interest to be paid. But with time, these longer mortgage terms could mean lower monthly payments as you continue to extend your mortgage obligation. This isn’t always the best way to go if you give more weight to the higher amount of total interest to be charged.
For those who wish to cut down their mortgage costs, interest rates are the most important factor. This can certainly be utilized, but it may be better to factor the length of the mortgage. Try looking for shorter loans, say, 15-year terms, with low monthly payments and you can save big-time on your overall mortgage payments.
You need to weigh in your personal finances when deciding whether to go with a 15 or 30-year term. There is no absolute best way around this. Determine first whether you can handle the fact that you’ll be paying more if you choose a shorter mortgage term. If you are paying about $1,000 monthly for a 30 year term, this could be about $1,250 or so if you’re paying on a 15 year term. Naturally, with these big payment amounts, you can build equity faster and pay off the loan quickly.
Depending on your mortgage needs, today’s market has a lot of policies with different term lengths. Before you even apply for a loan, check your options carefully to determine whether the mortgage would suit your needs perfectly.
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Topics: Real Estate Investing |
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