Loan Most Important Decisions

Loan Most Important Decisions



Loan : Most Important Decisions
15 or​ 30 years,​ Three Things to​ Consider
Perhaps one of​ the​ most important decisions to​ make about your loan will be whether you​ want to​ pay for 15 or​ 30 years .​
Statistically,​ the​ 30 year fixed mortgage has found the​ most favor amongst borrowers .​
The 30 year fixed rate mortgage allows borrowers to​ borrow more money as​ well as​ lower their monthly payment over a​ 15 year loan .​
After considering the​ amount that a​ borrower can pay monthly for PITI (Principal,​ Interest,​ Tax,​ and Insurance),​ it​ may be advantageous for the​ borrower to​ obtain a​ 30 year fixed rate mortgage in​ order to​ secure a​ lower monthly payment .​
For example,​ with a​ 30 year fixed rate mortgage amount of​ $250,​000,​ and an​ interest rate of​ 6.5%,​ a​ borrower could expect to​ have a​ monthly payment around $1,​580 .​
The payment for a​ 15 year mortgage at​ the​ lesser rate of​ 5.9% would be $2,​096 per month .​
The lower payment is​ obviously more attractive to​ the​ majority of​ borrowers.
There are,​ however,​ more factors to​ consider than just your monthly payment .​
With the​ help of​ a​ knowledgeable lender,​ you​ should carefully evaluate the​ following differences between the​ 15 and 30 year loan.
1 .​
The higher cost of​ a​ 30 year loan .​
While it​ may have a​ lower monthly payment,​ the​ interest has 15 more years to​ work its magic on​ your loan .​
The cost savings in​ interests of​ a​ 15 year loan over a​ 30 year loan can be staggering .​
a​ buyer over years can expect to​ pay for their house in​ interest over three times!
2 .​
The equity that you​ will have in​ your home during the​ course of​ each loan’s term .​
a​ 15 year loan will have a​ quicker equity build-up than a​ 30 year loan.
3 .​
The extra $516/month in​ our example above .​
In the​ case of​ a​ 30 year mortgage,​ you​ would have an​ extra $516/month .​
With a​ wise investment strategy,​ it’s important to​ consider the​ present value of​ that money and if​ it​ could be leveraged for other investments.




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