Do mortgages make your head spin? You’re not alone. There are so many different kinds that it’s hard to know what’s best for your specific financial situation. But chances are that you’ll fgo for either a 15-year or 30-year fixed rate mortgage.
They’re the same type of mortgage in that they both have an interest rate that stays the same throughout the duration of the loan. But the key difference here is in the length of the mortgage term.
A 15-year mortgage lasts for (you guessed it) 15 years. That means you have less time to pay off the mortgage, so your monthly payments will be higher as a result. But on the flip side, you’ll pay your mortgage off quicker so you’ll pay less in interest.
A 30-year mortgage gives you 30-years to pay off your loan, which is nice for sure. But that means you have 15 more years of interest.
Even though the 15-year mortgage seems like it costs so much more because of the higher monthly cost, a 30-year mortgage can end up more than DOUBLING the cost compared to a 15-year loan.
Talk with your lender and real estate agent, but my recommendation is to usually go for the 30-year option and then just pay the monthly amount you would have on a 15-year loan. It gives you the flexibility of the 30-year and the power to pay down your principal faster, which decreases the amount of interest you pay. Best of both worlds!
Have more questions about mortgages? I have answers. Just send me a DM!
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