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Which Is Better: A 30-Year Or A 15-Year Mortgage?
Dated: June 21 2019
There are a variety of mortgages are available in the market but most American homebuyers mostly choose between a 15-year or a 30-year mortgage. 90% of them chose the latter according to Freddie Mac in 2017.
But do you really understand the difference between the two? Which one really is much better for you? Read on to find out...
1. The advantage of a 30-year mortgage is getting a lower monthly payment but getting a much higher interest and total payments.
2. It is much easier to get approved for a mortgage and most homebuyers qualify for this one.
3. It makes it easier to fund your savings goal - whether for another investment or retirement because you'll have more free money in your budget to put for long term goals.
4. You'll have a little more security for paying a lower monthly mortgage in case of life's surprises like losing or changing jobs.
1. The advantage of a 15-year mortgage is you will be in debt half the time and you'll pay off your loan faster.
2. You can save thousands of dollars in total for having a much lower interest rate but with a much higher monthly payment.
3. It will be easier to refinance with a lower loan-to-value ratio.
4. In cases that you find you need to sell your home, you're less likely to be underwater.
Both have their own pros and cons, a 15-year may be too overwhelming to some or in the same way 30-year may be too long for others. It really depends on your situation and the goals you have in mind. Be sure to get some help with the experts to weigh down and choose the best for you.
Vanna has called Alaska home for the past 15 years. As a mother, real estate investor and previous business owner, Vanna brings many different perspectives when working for her clients. She has been a....