A loan term of 40 years produces a lower monthly payment than a 30- or 15-year mortgage. As Sheyna Steiner of Bankrate.com reports, the monthly payment on a $250,000, 30-year loan with a 5.25 percent.
A 15-year mortgage minimizes your total borrowing costs and allows you to eliminate your mortgage debt relatively quickly. But a 30-year loan has lower monthly payments, allowing you to save for other goals and pay unexpected expenses.
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If you can afford a 15-year mortgage you could save yourself thousands of dollars over the life of your loan. Even though the monthly payments on a 30-year mortgage are lower, with the interest rate being paid 15 years longer than a 15-year mortgage, a 30-year mortgage will end up costing you significantly more money over time.
The road from rent to mortgage For renters who aspire to own a home one. 40% of renters answered a basic question about 15-year and 30-year mortgages incorrectly, compared to just 19% of homeowners.
· Instead of selling your home, you do have the option of renting it out if you want to move. How much you should charge for rent will depend on factors like
15-Year Mortgage pros: 15-year mortgage Cons: Pay Off Mortgage Faster If you aren’t planning on staying in your home for long, this is a great option so you can focus on other things like saving for retirement. Higher Monthly Payments You will likely have higher payments going with this option vs a 30-year loan. Save Money On Interest
Total costs of a 15-year vs. 30-year mortgage. A 15-year mortgage is going to be a lot cheaper in the long-run. Reduced costs and lower risk for lenders means rates for a 15-year loan are substantially lower than rates for a 30-year mortgage. Plus, since you’re paying off the loan in half the time, you won’t pay interest for as long.
A 30-year mortgage can minimize payment and maximize your budget. For example, based on the current average interest rates, you can expect to pay roughly ,420 per month on a $200,000 15-year mortgage, while the payment on a 30-year loan of the same amount would be just $956.