These days, there are a lot of different mortgage loans available. Should you get a traditional 30 year loan, or a faster 15 year mortgage? It turns out that both options have pros and cons. Before you make a decision, take a look at these points:
A 30 year mortgage offers flexibility. Your monthly payments are lower, because they are spread out over more time. If you become ill, lose your job, or have some other financial trouble, you are less likely to get into trouble with your mortgage. If you want to pay off your mortgage early, you can choose to pay extra each month toward your loan principal.
However, a 30 year mortgage carries a higher interest rate. That’s because the bank is taking a longer risk with you. So even if you do pay off your mortgage early, you will still be paying more in interest.
A 15 year mortgage will save you money with a lower interest rate. Borrowing money for a shorter time at a lower rate will save you thousands of dollars in interest payments over the life of the loan.
15 year mortgages also force you to pay off your loan earlier. If you can afford the higher monthly payments but don’t have the self-discipline to make extra payments yourself, this might be the right option for you.
However, the downside to a 15 year mortgage is the lack of flexibility. If you do run into financial trouble in the future, you can’t just pay less and turn it into a 30 year mortgage.
How do you decide which mortgage is right for you? Get preapproved for a mortgage before you start shopping for a home, and talk to your loan officer. Find out what the payments will be, and see how they fit into your budget. When you’re ready to shop for a house, contact me for an appointment. I look forward to helping you find your dream home!
Patty Ross
831-236-4513
pattyre@comcast.net
www.pattyrosscarmel.com
Click here to listen to Patty discuss the latest trends in Northern California Real Estate including the communities of Carmel, Carmel by the Sea, Carmel Valley, Marina, Monterey, Pacific Grove, Pebble Beach and Seaside
Photo courtesy Fernando Mengoni, Stock.XCHNG.
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