It used t o b e t he first choice of most borrowers, because since t he total payments are spread over a longer period of time w ith t he interest rate set for t he entire t ime of the mortgage. 3 0 year home loan r ates are an industry standard but is it t he right c hoice for you?
The 30 year home loan is an industry s tandard, but is it t he right choice for you? Because t he total payments are spread over a longer period of time a nd t he interest rate set for t he entire time of t he mortgage. T his was t he first choice of mo st home owners.
As we mentioned, t he plus side for a 30 year home loan is lower m onthly payments. T his attraction is some what dimmed by t he fact t hat you pay thousands e xtra in interest. B ut, y our interest is 100% tax deductible w hich d oes lower y our after tax cost. It offers y ou some flexibility so t hat if y our financial situation changes a nd you have more money you can pay it off in less than 30 years, this while keeping t he low monthly payments. Your payments a re smaller so in reality you can p urchase a larger roomier home.
To show an example of t he interest difference between 30 year home loan rates a nd one of t he other rates. On a 30 year, 100,000 dollar loan using 7% interest rate your monthly p ayment of interest a nd principle would be $665.30 dollars. Over t he n ext 30 years you'll have paid $139,511.04 in interest alone. N ow with a 15 year home loan rate on t he same a mount you''ll pay $871.11 per m onth a nd over t he next 15 years, you would pay $56,799 in interest. T his would save you $82,712 d ollars.
If you have t he will power to invest t he savings f rom t he m onthly payments, it st ill could be a good choice to go wi th t he 30 year mortgage. Especially if you can f ind an investment t hat t he long term payoff matches or exceeds w hat you would save in a 15 year mortgage. Another factor to consider is h ow fast yo u want to accrue equity in your home or to own it out right. 30 year home loan rates take much longer to build equity.
30 year home loan rates are certainly attractive a nd t he vast majority of home buyers get 30 year loans because t hat is t he longest home loan available today. Experts agree if t hey could get a 35- or 40-year loan, t hey probably would. T here are many other options t o consider. Probably t he biggest question you have t o ask your self when considering a loan is w hat are y our financial goals? W hat loan plan will help y ou t he most to reach t hat goal? It is clearly to y our advantage to look into other loan options for t he best loan available for y ou a nd your financial goals. It may surprise you t hat because of your personal situation there may be other plans more suitable for you.
