Choosing Between a 15- and 30-Year Mortgage
A wide selection of loan types is available to help you finance your new home. But most prospective buyers find themselves choosing between 15- and 30-year mortgages. This is because these long-term loans are often the most beneficial and financially convenient. Read about some of the primary advantages of these loans and learn about which type might be best for you.
What Does a 30-Year Mortgage Entail?
Through the years, the ever-popular 30-year mortgage has practically become an archetype of American homeownership. And when you consider that these long-term loans enable buyers to land the houses of their dreams at affordable prices, it’s not hard to see why. Typically, there are two types of 30-year mortgages:
- Fixed-Interest. The interest rates on the loan never change, even when the market does.
- Adjustable-Interest: Interest rates are subject to fluctuations in the market.
And while both types of 30-year loans are beneficial, the more popular between them tend to be fixed-interest mortgages.
However, it’s wise to tread lightly with long-term loans like these, as lenders will often slap hefty interest rates on them. So if you choose to go with this type of loan, consider the interest rate your lender tacks onto it.
What Does a 15-Year Mortgage Entail?
A 15-year mortgage is the dream loan for buyers who make a bit more money and can afford higher monthly payments. As the name suggests, these home loans have a life span of 15 years, and they’re great if you’re looking to attain ownership of your home quickly while building equity. Just as well, these loans typically come with lower, fixed interest rates, which can save you thousands of dollars throughout the mortgage. However, it’s worth noting that your insurance and tax rates are subject to change, and they may increase over time.
Which Is Right for You?
When you’re choosing between a 15- and 30-year mortgage, it’s prudent to understand your current financial situation and how it might change in the future. For instance, suppose your income can easily cover a monthly mortgage of $3,500 and your career is developing quickly. In this case, it might be beneficial to sign on for a 15-year mortgage. Inversely, if you need a bit more financial cushion and you know you’re planning to live in your home until retirement, then a 30-year mortgage will likely make a little more sense for you.
Both of these mortgage types have their advantages and disadvantages. So the one that will be the most beneficial to you will primarily depend on your financial situation when you apply for the loan and how you expect your finances to change in the long run.
Selecting the correct type of financing is crucial to landing the home of your dreams. With so many options available, it’s essential to learn about the advantages of each. Hopefully, this guide has shed some light on the benefits of the two most common long-term mortgage types.
And if you happen to be house-hunting in Sin City, give us a call at Streamline Mortgage. We’ll set you up with hard money lenders in Las Vegas that’ll help you make your dreams of homeownership a reality.