When someone is looking to purchase a house, they need to think about how long they want their mortgage to last. While a bank can structure a mortgage to last for any number of years, the most common lengths are 15 and 30 years. While a 30-year mortgage is typically more affordable, a 15-year mortgage is cheaper overall.
When someone is trying to decide how long they want their mortgage to last, there are a few important tips to keep in mind.
The Benefits Of A 15-Year Mortgage
There are a few important benefits that everyone should know about a 15-year mortgage. Some of the biggest benefits include:
- With a 15-year mortgage, people are going to pay off their home more quickly. This will free up cash to spend in other places. Those who are looking to retire without a mortgage may want to go with a 15-year mortgage.
- Next, a 15-year mortgage is going to come with a lower interest rate. Because the bank is going to get their money back more quickly, they are going to reward the borrower with a lower interest rate. Overall, the bank is taking on less risk.
- Finally, a 15-year mortgage is also going to be cheaper overall. With a lower interest rate and a loan that is paid off more quickly, the bank is going to take less of someone’s money over the life of the loan.
The Benefits Of A 30-Year Mortgage
A 30-year mortgage has some notable differences when compared to a 15-year mortgage. There are a few important benefits that people need to remember. These include:
- The monthly payments are going to lower. Those who are planning on paying for their children’s college education, or who envision a car payment in the near future, may want to have extra cash on hand to fund them.
- As someone pays off their mortgage the interest paid on the loan is tax-deductible. Since more interest is paid on a 30-year mortgage, there will be greater tax savings as well. This means that people will get some of their money back.
- Finally, a 30-year mortgage is also more flexible. During the loan, people may elect to make extra payments. This allows someone to pay off their home more quickly.
These are a few of the most important points people need to remember when trying to decide between a 15-year and 30-year mortgage. As always, call your trusted home mortgage loan professional to discuss the options available for your personal situation.