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Exploring Mortgages

A 15 or 30-year mortgage loan is a tough decision 

Mortgage Advice

When financing a house, it is essential to analyze what sort of mortgage adjusts to your necessities.

"Fifteen-year mortgage rates certainly look enticing these days, and the idea of owning a home, debt-free, in less time than it takes to raise a child, sounds grand. So what’s the catch?" asks Vickie Elmer in The New York Times.

Before choosing a 15 or 30-year loan, calculate how much money there will be left aside your monthly mortgage fee. Is it enough for you to live on?

Let's have a look at the example from The New York Times:

"On a $300,000 loan, for example, you would pay about $1,475 a month for principal and interest over 30 years, versus $2,145 over 15 years. That assumes a 4.25 percent rate on the longer loan and 3.5 percent on the shorter one.

You would save about $145,000 in interest payments over the life of a 15-year mortgage and build up equity in the home faster [...]. In the first year, principal would be reduced by $15,000, versus about $5,000 on a 30-year loan".

The more you can reduce years in a mortgage the better. But, nonetheless, if you are worried about job security you should opt for a 30-year mortgage. Keep in mind that spreading out the loan length increases the final price of a house.

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