By Jason Boone
As a home buyer you have a lot of decisions to make ahead of you and one of the biggest decisions is should you choose a 15-year mortgage or a 30-year mortgage?
Although many people will tell you by default that a 30-year mortgage is always the best mortgage to choose when purchasing a home here are three important reasons why you should consider choosing a 15-year mortgage loan.
Reason 1 – One Percentage Point Lower Thank 30-Year Mortgage
Thanks to recent statistics from Bankrate.com we know that an average 30-year mortgage right now has an interest rate of 4.25% while a 15-year mortgage interest rate is averaging about 3.25%.
This is huge when you consider the potential savings that you could enjoy when choosing a 15-year mortgage loan vs. a 30-year mortgage loan.
The reality is that choosing a 15-year mortgage loan isn’t for everyone and you must make certain that you are ready for this commitment financially before going with this option.
Reason 2 – Choosing a 15-Year Mortgage Will Make You More Disciplined Financially
Paying a mortgage every month does require commitment for sure but choosing a 15-year mortgage requires even more financial commitment and discipline because, you will be required to make a higher monthly mortgage payment.
For example: Let’s say that you choose a 15-year $250,000 mortgage loan at 3.25%. Your mortgage payment will be roughly $1,755 per month while you would be paying just $1,230 for your mortgage payment if you had a 30-year mortgage.
The financial commitment is important to keep in mind before signing the loan documents for a 15-year mortgage but ultimately the results will be worth it if you want to have your mortgage paid off well before you retire and enjoy your golden years without a mortgage payment.
Reason 3 – You Will Quickly Build Home Equity
Did you know that when you choose a 15-year mortgage over $13,000 of the mortgage payments that you make in the first year of your mortgage will go toward home equity? Awesome right?
This is a huge difference when compared to just $4,200 in home equity that you will build up during the first year of mortgage payments that you would make on a 30-year mortgage loan.
For more valuable tips that will help you when buying a home in Bend, or to view the latest homes for sale in the area, contact me, Jason Boone Principal Broker at Duke Warner Realty | Skjersaa Group by calling me today at (541) 383-1426 or click here to contact me online.