When buying a home there are a lot of decisions to make, and choosing a mortgage is of no exception. With all of the available options, the whole process can be a bit overwhelming.
The 30-Year Fixed Mortgage is often the most popular because it offers the most flexibility. It’s usually the most affordable option and gives you the financial ease to do other things like buy a car, save for a child’s education, or set aside money for your retirement.
However, if you look more closely, you might get the best financial gain from the shorter 15-year loan. The 30 and 15-year loans are structured much the same way, but the subtle differences in their terms could make a big difference for you in the long run.
The biggest, and most obvious difference between a 15 and 30-year loan is how long it will take to repay. The 15-year loan will have a larger payment, but more of that payment goes toward your loan principal, since most 15-year loans have a lower interest rate. While the 30-year loan offers a more comfortable payment, you will lend up paying more interest over the longer term.
Selecting a mortgage is one of the most important financial decisions you can make. Be sure to talk with a lending professional to see what options are right for you.