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30 YEAR MORTGAGEMany homebuyers are in a tough position when it comes to choosing between a 30 year mortgage and a 15 year mortgage. While we all know that you will save a bundle in interest if you choose a home loan that has a shorter duration, we also know that this can cost a lot more out of our pockets each month. After making some considerations many of us choose a 30 year mortgage for our homes.
This may come as a surprise but you can save about 100 thousand dollars over the course of your mortgage if you opt for a 15 year loan. This is on a 100 thousand dollar loan. I was shocked to discover that the interest paid over 15 years was 64,000 dollars in comparison to 164,000 dollars for a 30 year mortgage.
Why on earth would anyone want to spend an extra 100 thousand dollars on their home? The answer is simple. People who choose a 30 year mortgage want to make sure that they can meet their monthly obligation to the lender each month. If you choose a shorter life for your loan you will have higher monthly payments.
Choosing a 30 year mortgage is a great option for anyone who likes to have control over his finances. What I mean by this is that the person owing on the home loan can put extra money in his monthly payment each month. This will help to reduce the amount of the debt over time. With the 30 year mortgage payment the family is also able to pay the minimum amount due each month.
When we first met with our loan officer we thought that we had our payments all figured out. We decided that a shorter loan that cost less in interest would be the best approach. However, after discussing the options with a professional, we opted for a 30 year mortgage instead. This was a great decision.
Our family’s situation has changed since we bought our home. We have less income than we did at the time that we purchased the house. The 30 year mortgage costs a couple hundred dollars less each month than the 15 year home loan would have. We are in a position to put extra on our monthly payments if we can and we are also not struggling to make our minimum payment each month.
While a 15 year plan seems ideal to some many families are far more comfortable with the 30 year mortgage. The best way to determine which is best for you may be to consult a professional.
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