When it comes to purchasing a home, not only do you have to get approved for a mortgage, you also need to determine what kind of mortgage you want to enter. The length of the mortgage does matter, so you need to carefully consider if a 15- or 30-year mortgage fits your needs.
Enjoy Lower Payments with a 30-Year Mortgage
One of the reasons many people choose a 30-year mortgage over a shorter loan period is because you will be able to enjoy lower monthly payments. Being able to enjoy lower monthly payments can make purchasing a home a more affordable proposition. Oftentimes, when you finance a home over 30-years, you may be able to keep your mortgage payments as low or even lower than your current rent payments. Having lower payments can be helpful.
Enjoy Less Interest with a 15-Year Mortgage
When you have a 15-year mortgage, one of the biggest benefits is that you can pay less money for the mortgage over the life of the loan. When you have a 15-year mortgage, you save yourself from making paying fifteen years' worth of interest. Paying less mortgage means when you pay off your loan, you will have paid less additional money in interest than someone who purchased a home at the same price, but who had a longer loan period.
Enjoy Equity at a Faster Rate with a 15-Year Mortgage
When you take out a 15-year mortgage, if you make all of your loan payments on time and pay off your home during those 15 years without refinancing, you will have built up more equity than someone with a similar home and a 30-year mortgage. When you have a 15-year mortgage, you can then sell the home and access all of that money or you can keep living in the home, knowing that you built up your equity and you can now invest money in something else. You can build up equity not only in your home but in outside sources once your home is paid off.
Spread Out Your Investments in a 30-Year Mortgage
When you have a 30-year mortgage, and all your money is not going into your home, you can put that money into other investments. Instead of just building up equity in your home, with good money management skills, you can build up equity in things such as personal savings and retirement accounts at the same time as your income increases over the years.
When it comes to choosing between a fifteen- and thirty-year mortgage, it really depends upon what your financial goals and income are. If you can afford a higher loan payment, a fifteen-year loan can allow you to build up equity at a faster rate. A thirty-year mortgage can allow you to enjoy lower loan payments and build up your wealth in a variety of different ways. For more information, contact a home mortgage lender in your area.Share