At Energy Smart New Homes, we are all about getting you the most for your money. One area that many home buyers are concerned with saving money in is with their mortgage. For most of us, a 30-year fixed rate mortgage is what we hear about most commonly, and it is what’s most popular among home loan borrowers today. But this type of mortgage is not the only option. How can you decide which kind of mortgage is best for you? Let us help shed some light on this confusing subject.
In this article we will delve into the benefits and pitfalls of both 30- and 15-year mortgages.
The upside of a 30-year mortgage is that it gives you a lower month to month payment. Yay! The downside? Interest. Over 30 years, you will ultimately be paying thousands of dollars more than a 15-year mortgage due to interest.
For example, the difference between purchasing a home for $150,000.00 with a 15-year fixed rate mortgage at 8% interest versus a 30-year fixed rate mortgage at 8% would look a little something like this:
Monthly Payment:
15-year: $1,433.00, 30-year: $1,101.00
Interest on first 5 years:
15-year: $54,158.00, 30-year: $58,644.00
Interest on the full term of mortgage:
15-year: $108,026.00, 30-year: $246,233.00
As you can see, although you save $332.00 a month in the 30-year mortgage, by cutting that mortgage time in half, you would save $138,207.00 in interest with the 15-year mortgage. If, however, you have the self-discipline to invest the money you would be saving monthly with the 30-year mortgage, it may still prove to be a good choice for you.
Another factor to consider is equity or how quickly you would like to own your home outright. A 30-year agreement, of course, will take longer to build equity and to own your home fully.
By far, home buyers choose the 30-year mortgage option over a 15-year. Investors have expressed that if a 35- or 40-year loan was offered though, that this would likely be the most popular course for many to take. Ultimately, you will need to carefully consider your finances and what your financial goals are. Make sure to weigh out all your options and choose what will set you up best for the future.
Remember that what might be best for others may not be right for you, so resist the urge to compare your choice with friends or family. If you do need advice, try reaching out to a financial advisor. They can help answer all your questions concerning complicated matters such as mortgages.
If you are ready to take the next step into homeownership, congratulations! If you happen to be looking in Alabama, we would love to help you find your home sweet home. If you would like to be able to put more money towards your mortgage instead of your utility bills, you have come to the right place.
By Energy Smart New Homes 8-8-2019
Recent:
Categories
Archive
Oct 2024
Sep 2024
Aug 2024
Jul 2024
Jun 2024
May 2024
Apr 2024
Mar 2024
Feb 2024
Jan 2024
Dec 2023
Nov 2023
Oct 2023
Sep 2023
Aug 2023
Jul 2023
Jun 2023
May 2023
Apr 2023
Mar 2023
Feb 2023
Jan 2023
Dec 2022
Nov 2022
Oct 2022
Sep 2022
Aug 2022
Jul 2022
Jun 2022
May 2022
Apr 2022
Mar 2022
Feb 2022
Jan 2022
Dec 2021
Nov 2021
Oct 2021
Sep 2021
Aug 2021
Jul 2021
Jun 2021
May 2021
Apr 2021
Mar 2021
Feb 2021
Jan 2021
Dec 2020
Nov 2020
Oct 2020
Sep 2020
Jul 2020
Jun 2020
May 2020
Apr 2020
Mar 2020
Feb 2020
Jan 2020
Dec 2019
Oct 2019
Aug 2019
Jun 2019
May 2019
Mar 2019
Jan 2019
Dec 2018
Oct 2018
Aug 2018
Jun 2018
Apr 2018
Jan 2018
Oct 2017
Aug 2017
Jun 2017
May 2017