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30-Year Home Loans vs 15-Year Loans

The professionals at Handler Homes are committed to helping our customers get the biggest bang for their hard-earned bucks. One expense customers often express trepidation about is their mortgage.

Many people are familiar with the commonly obtained 30-year fixed rate loans. That said, this is not the only choice prospective home buyers have. Read on to learn how to choose the most suitable option.

Both the 30-year and 15-year mortgages have their pros and cons.

The greatest benefit of a 30-year loan is that monthly payments will be lower. However, on the other hand, interest is higher, and the homeowner will dole out thousands more in such expenditures than those investing in 15-year obligations.

A case in point is a home purchased for $150,000 with a 30-year mortgage at eight percent interest compared to the same figures factored into a 15-year loan.

Monthly payments for the 30-year agreement are $1,101 per month while the 15-year note is $1,433 a month. However, the 30-year loan yields $58,644 interest while the 15-year obligation results in $54,158 worth of interest payments over a five-year span. Over the mortgage's complete terms, 15-year arrangements equate to $108,026 while the 30-year loan comes out to $246,233.

The preceding numbers prove that, while the homeowner investing in the 30-year note saved $332 per month, said subject is shelling out more than $138,000 more in interest. Financial professionals maintain that 30-year mortgages are right for individuals possessing the discipline to save the money they are collecting through these lesser monthly bills.

Another critical consideration is the establishment of equity. Homeowners achieve equity when they own the property outright. Naturally, longer debt obligations require more extensive periods to satisfy and delay equity obtainment.

The 30-year options continue to be the most favored option amongst home buyers. However, research has concluded that should 35 or 40-tear options be given, said choices would likely become the favored alternatives.

At the end of the day, investors must carefully ponder their financial standing, long-term goals, and make decisions most amenable to their circumstances. Such decisions should be made after obtaining the counsel from an experienced financial advisor and not be influenced by those made by family, friends, or in accordance with popular trends.

Those who believe they are prepared for home ownership should be commended in achieving this major life step. Handler Homes would like to help prospective homeowners find their next abode and turn this dream into a reality.

By Handler Homes 1-21-2022