When purchasing a home, there are countless decisions to be made. Should you live in this neighborhood or that? Should you buy or build? Should you get the house with the basement, or the one with the pool? And the decisions don’t stop with the house you choose to buy; in fact, you will still have some pretty big decisions to make, such as what type of home loan will you get and how long your loan term will be. Today, our team at GVC Mortgage is addressing the pros and cons of 15-year and 30-year fixed mortgages to help you decide which is right for you.
A 15-year mortgage comes with some pretty obvious benefits. Because the term is shorter, you’ll spend less time making payments and pay less interest money overall. You can also build equity in your home faster, which means you could tap into your home’s equity sooner for things like home renovations or repairs. Home equity is the difference between what your home is worth and how much is left on the loan, so to tap into it you can either refinance or take out a second mortgage. However, 15-year mortgages are not right for every situation. Because the monthly payment will be double the amount it would be on a 30-year mortgage, many homebuyers are not able to make a 15-year mortgage work in their budget. Typically, 15-year mortgages are best suited for older homebuyers who are more financially established and want to pay off their mortgage before retirement.
The 30-year mortgage has been a consistent favorite among homebuyers for many years because of the lower monthly payment it provides. Though more of your money will go to interest and it will take twice as long to pay off, the lower monthly payment makes it worth it. Additionally, choosing a 30-year over a 15-year mortgage might make it possible for you to afford a bigger, better property because you’ll have 30 years to pay it off rather than only 15.
Still not sure whether a 15- or 30-year mortgage is right for you? No problem! Our team at GVC Mortgage takes pride in walking homebuyers through the mortgage process. We’ll answer all of your questions and get you on your way towards home ownership. Contact our Carmel office today at (317) 564-4906.