Which Term is Right for You? 15-Year vs. 30-Year Loan

A mortgage application has been approvedBuying a home is a long-term financial commitment. If you’re getting a mortgage, you need to choose between a 15-year and a 30-year term. Both lengths have pros and cons and examining them can help you choose the ideal loan term.

15-Year Loan

This term is less risky for lenders, as it is half shorter than its counterpart. This, however, will require you to pay more than with a 30-year term, as you can own the home faster. It can be a deal breaker some, but this still depends on the amount you can comfortably afford and the amount you can borrow. If you don’t have a problem paying more, this term may be the right option for you.

You can also consider a 15-year mortgage if you’re nearing retirement. Mortgage companies in St. George note that a shorter term carries low rates, helping you save more in the long the run. This also means paying a significantly lower interest rate over the life of the mortgage. This will also help you build equity sooner.

30-Year Loan

This is a common choice for many homebuyers. It has lower monthly payments than a 15-year loan, which makes it ideal if you have a tight budget. This, however, means paying the loan and its interest for a longer time. This can add up to the total cost of the mortgage.

Even if the rates on a 30-year loan are higher, its low monthly payment seems a good deal for many potential buyers. This is because it can allow them to pay off debts and afford other expenses. If you will need to stretch your finances more to afford the payment of a 15-year loan, it is better to stick with the longer mortgage term.

It is best to talk with a reliable lender to learn more about these loan terms. This can help you decide which length is ideal for your situation. Don’t forget to keep in mind the amount of loan you can realistically afford.