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Choosing between a 15 and 30 year Mortgage Term when purchasing Real Estate

Vanilla or chocolate? Chevy or Ford? Jack or Johnny?

Most choices are tough, But choosing between a 15 year or a 30 year fixed Rate Mortgage doesn’t have to be.

Just how people have different preferences in ice cream flavors.  There are pro’s and con’s of each mortgage term that will appeal to different financial situations and long term goals.  The main difference when purchasing Plattsburgh Real Estate is how much you are willing to put toward your monthly payment.

On a 15 year term you have a higher monthly payment, but less interest over the life of the loan, on the other hand a 30 year loan has the lower monthly payment but a higher amount of  interest paid over the 30 year Real Estate Purchase term.

15 Year Fixed Rate Mortgage

The biggest consideration is how much can you comfortably afford and qualify for based on todays interest rates.  If you want to pay off your loan faster, and pay less for the home overall this is a great choice.  For the most part their is a lower interest rate on a 15 year term and you can pay off your home in half the time of a 30 year fixed.  Instead of 360 payments (30 year) you only make 180 payments, a great tool if you plan on retiring soon or plan on having college expenses for your children in the future.  The 15 year Term helps free up a large chunk of your income sooner than a 30 year fixed.

The main downside is since the monthly mortgage payments are higher, you may not qualify for as much house as you would with a 30 year loan.  That is an important consideration for the current Real Estate and Housing Market in Plattsburgh, NY.

Pro’s

  • Lower interest Rate
  • Allows you to quickly build equity
  • Less interest accumulation over time

Cons

  • You qualify for less home
  • More expensive monthly payments

30 Year Fixed Rate Mortgage

A 30 year Fixed Rate Mortgage is great for those looking for a more affordable monthly payment when purchasing Real Estate or for the first time home buyer who has not yet reached the peak of their income.  This is also a great option for first time home buyers who want to stay in their home for the majority of the term.  The 30 year fixed term consist of 360 payments over a 30 year term, Since it is a longer term the payments are lower but you pay more interest over the life of the loan.  A 30 year fixed rate term also normally has a higher interest rate than a 15 year fixed.  For todays Interest Rates Click Here and one of our Mortgage Pro’s would be happy to assist you.

Still the main draw of a 30 year fixed is its affordability and its ease to budget for purchasing Plattsburgh Real Estate.  You also qualify for more home as a first time home buyer as your monthly payments will be less.  Another thing to remember is on most 30 year Fixed rate loans you still have the option to pay more towards your principal each month to pay off the loan sooner.
Pro’s

  • Lower monthly payments
  • You can qualify for a larger loan amount
  • Ideal if you plan on staying in the home for a long time

Con’s

  • Higher Interest Rate
  • You pay more interest over the life of the loan
  • slower accumulation of equity

What loan term is right for you?
The best way to know is talk to an expert or call 518-324-5544 and review in depth what your financial and Real Estate goals are.   Whether purchasing your first home or a 4 – unit income producing property our experts are always here for your questions.  We can go over different scenarios in real time.  If you have a busy schedule you can even apply online.   Here’s a scenario that can help illustrate the difference.  On a $100,000 loan with a 4% interest rate a client with a 15 year term would pay an estimated $39,000 Less interest over the life of the loan compared to a 30 year term.  Their monthly payment would be roughly $260 more per month.  That would be around $740 for a 15 year term versus $480 on a 30 year term (Estimated)

 

Determine the right Home loan for your Real Estate Purchase by talking to the experts! If your interested in a Free first time home buyers consultation give us a call at 518-324-5544 or  send us a message on Facebook.  We look forward to answering your questions.