15 or 30 years, Three Things to Consider
Perhaps one of the most important decisions to make about your loan will be whether you want to pay for 15 or 30 years. Statistically, the 30 year fixed mortgage has found the most favor amongst borrowers. The 30 year fixed rate mortgage allows borrowers to borrow more money as well as lower their monthly payment over a 15 year loan. After considering the amount that a borrower can pay monthly for PITI (Principal, Interest, Tax, and Insurance), it may be advantageous for the borrower to obtain a 30 year fixed rate mortgage in order to secure a lower monthly payment. For example, with a 30 year fixed rate mortgage amount of $250,000, and an interest rate of 6.5%, a borrower could expect to have a monthly payment around $1,580. The payment for a 15 year mortgage at the lesser rate of 5.9% would be $2,096 per month. The lower payment is obviously more attractive to the majority of borrowers.
There are, however, more factors to consider than just your monthly payment. With the help of a knowledgeable lender, you should carefully evaluate the following differences between the 15 and 30 year loan.
1. The higher cost of a...
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