The Home Buyer's Korner

Information presented should be used for educational purposes only.

November 27th, 2012

Guy looking up in color

15 vs 30-Year Fixed Rate Mortgage

15 year 30 year fixed Which Is Better : 15 Year Fixed Rate Mortgage Or 30 Year Fixed Rate Mortgage?As a home buyer or refinancing household, you have choices with respect to your mortgage. You can choose a loan with accompanying discount points in exchange for lower mortgage rates; you can choose adjustable-rate loans over fixed rate ones; and you can choose loans with principal + interest repayment schedules or repayments which are interest only, as examples.

For borrowers using fixed rate loans, there’s also the choice between the 30-year and 15-year fixed rate mortgage. Each has its positives and negatives and neither is “better” than the other.

Choosing your most appropriate fixed-rate term is a matter of preference and sometimes of budget.

The 15-Year Mortgage

With a 15-year fixed rate mortgage, mortgage rates are often lower as compared to a comparable 30-year fixed rate mortgage. However, because loan repayment is compressed into half as many years, the monthly payment will necessarily be higher, all things equal. On the other side, though, homeowners using a 15-year fixed rate mortgage will build equity faster, and will pay less mortgage interest over time.  Be sure to discuss these options with your loan representative and have them provide you a comparison in principle and interest payments, so you can evaluate them and include in your home budget to see what’s comfortable for you.

The 30-Year Mortgage

With a 30-year fixed rate mortgage, mortgage rates tend to be higher as compared to a 15-year fixed rate loan, but payments increase by as much as 50%.  If you’ve got a price range in mind and want to learn more an easy mortgage payment calculator can be found here.  You can also see what average mortgage interests rate are nationwide simply by looking to the right of the new page. Be sure to use these percentages as this and other mortgage calculators often don’t auto populate today’s current rates.

30-year fixed rate mortgages remain the most common mortgage product and if the house your thinking about  isn’t where you plan to life for more than five year or less, chances are a 30-year fixed rate mortgage could be right for you.  However lower payments come at a cost; being their pay off date is much further into the future.  Something else to consider is the 30-year fixed rate mortgage can qualify you to purchase homes at a higher price point.

Which One Is Right For You?

There is no “best” choice between the 15-year fixed rate mortgage and the 30-year fixed rate mortgage. Choose a product based on your short-and long-term financial goals, as well as your personal feelings regarding debt.

HOME OWNERSHIP TOOLS

FHA 203K

Your Home Purchasing or Refinancing & Renovation Tool

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

FANNIE MAE HOMESTYLE

The Conventional Alternative to FHA 203K

Great for Real Estate Investors and Second Home Renovations

You Mortgage Loan Officer, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

 

USDA RURAL DEVELOPMENT

Up to $10K for Home Improvements, Renovations or a Simple Remodel

Your Mortgage Loan Officer, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

To print this document click on “Open in New Window” located at the lower right corner; click on “File”; then click on “Print”. In the center of the screen you will have the option to “Create A Printable PDF of the Presentation”.

JOIN OUR REAL ESTATE SOCIAL MEDIA NETWORK

The Home Buyer's Korner

Real Estate Marketing Blogs and Coaching

Mortgage Lenders Social Media Marketing Blogs

General Contractors Renovation Network

LINKEDIN

Twitter

PINTEREST

Facebook Group 2

Join us at Real Estate Social

Leave a Reply

You must be logged in to post a comment.