When financing a home purchase, a majority of homebuyers in America have opted for the 30-year fixed rate mortgage. While it is a tried-and-true path to homeownership, the 15-year fixed rate could be a better option and should not be overlooked. The loans are structurally similar, but the main difference between the two is the term of years. With so many loan types out there, it’s hard to know which is right for you. Here are some concepts to consider from the experts at GVC Mortgage when deciding between the year terms.
Because a 15-year term is fewer years, you’ll be paying much less in interest. Also, banks view 15-year loans to be less risky and will offer a lower interest rate. So, 15-year loans cost considerably less than 30-year. Many homebuyers, however, opt for the 30-year because the monthly payments on a 15-year loan are double what they would be on a 30-year. 15-year loans are typically suited for older homebuyers who want to pay off their mortgage before retirement. Older homebuyers are also often more financially established and able to handle the higher monthly payment.
A 30-year loan is attractive to homebuyers because of the lower monthly payment. Your home mortgage most likely has the lowest interest rate compared to the rest of your debt. So, you can use the money you save on monthly payments to pay down student loans, credit cards, and auto loans. You could also use the extra funds to save for other financial goals such as retirement or to invest.
To find out whether a 15-year or 30-year loan is best for your home purchase, contact us today at (317) 564-4906. GVC Mortgage has helped Indiana home buyers in and around Carmel, Indianapolis, Fishers, Westfield, Noblesville, and the surrounding areas since 1996. Let us schedule a time for you to meet with one of our loan professionals to find the right financing option.