Mar 31, 2015
Shopping for the perfect mortgage is just as important – and can be just as stressful – as shopping for the perfect home. Which one do you choose? Here are some of the pros and cons of two of the most popular mortgage loans: the 15-year and the 30-year loan.
The 15-year mortgage can save you thousands of dollars over the life of the loan; the interest rate is usually lower and amortization is half that of the 30-year loan. Total interest paid on the 15-year loan is significantly less because of the shorter borrowing period. A 15-year loan accrues principal much more quickly than a 30-year loan, so you own your house in about half the time.
However, because you build equity faster and pay off the loan sooner, a 15-year mortgage requires higher monthly payments. Have a local lender help you calculate the overall savings of the 15-year loan compared to the 30-year loan. Make your ultimate decision based on your unique circumstances and overall financial plan. Take into consideration such things as whether you are nearing retirement age, or will soon need to pay for college expenses for your children. Your budget, spending habits, and financial goals should all be considered before making a decision on a loan.
Still not sure if a 15-year or 30-year loan is right for you? You could consider the 40-year loan: smaller monthly payments make this mortgage more appealing to some homebuyers. However, the interest accrued over time might not be worth saving a few dollars each month. Shorter-term loans are usually more advantageous for buyers.
For more information on mortgage loans, contact the knowledgeable real estate agents at Hilton Head Island Real Estate Brokers. We can help match you up with a local lender and make sure you get the mortgage loan that best fits your needs. Call 843-785-8006 or fill out our contact form today.
If you want to make a little piece of The Island your own, you need more than just a road map and a REALTOR. You need a partner who can make things happen.
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