When you’re buying your house, there are a lot of different options. FHA, Conventional, Jumbo, VA, USDA, there are tons of different configurations for your mortgage. One of the most important questions for you, though, is the length of the loan. Let’s talk about a 15 Year vs 30 Year Mortgage.
What’s The Difference?
A recent survey revealed that 86% of home loan applicants opt for a 30-year mortgage. Why is that? Well, the basic math for a 30 Year mortgage means that you are spreading out the payments across a longer period of time, allowing you to make smaller payments. People generally opt for this because it’s more affordable.
If you know that you can’t pay a higher rate every month, you opt for the 30. It’s safer and offers less monthly risk or exposure to being unable to make your mortgage payment.
So Why Go With a 15-year Mortgage?
A 15 Year mortgage is going to cost you more monthly. That’s the nature of the beast. BUT. You’re going to pay less in the long run. You’re essentially cutting off 15 years-worth of interest. This not only makes you a homeowner faster, you also build equity more quickly, giving you an opportunity to refinance and take money out or get a lower rate or lower payment in the future.
Best of Both Worlds?
If paying off a 25 year mortgage every month is too daunting, which it is for many homeowner, you can always pay off your loan faster. Most lenders, including The Home Loan Expert, Ryan Kelley, have no penalty for paying your mortgage off early. This can be a way to save money in a 30 Year mortgage. If you have some extra cash, you can make a larger than normal payment, and that money comes off of the end of the loan. You can start saving yourself interest money today and get some cash back on the back end of the loan.
There’s also nothing stopping you from refinancing from a 30 to a 15 during the life of the loan. That’s another way to save money if your situation changes.
Once you’ve decided on what loan fits you the best, take advantage of lower mortgage rates to buy it and save money. Call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555. You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. Don’t forget to follow @TheHomeLoanEx on Twitter for breaking mortgage news and knowledge. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?