The most basic decision on a mortgage has nothing to do with interest rates
. It has more to do with the term of the mortgage - should you go with a 30 or 15 year term?
Deciding Between 15 and 30 Year Mortgages
Most people consider two things when debating on mortgage policies. Which policy would give you more money in the long run and have you paying less? How can you find policies with low interest rates? But failing to consider the term of a mortgage could result in money lost, regardless of the interest rates you have to pay.
Here are a few reasons why choosing the right mortgage terms is critical. First is simply because your mortgage term determines how long you have to pay. And you also need to know how much interest or finance charges you will potentially be paying. You can never pay too little attention to these things.
Naturally, if you're choosing a mortgage with a 30 year term, you shall be paying more interest. The good thing about 30 year terms is that you will be paying smaller monthly payments as the loan stretches out. This isn't always the best way to go if you give more weight to the higher amount of total interest to be charged.
The average person is more concerned with interest rates on mortgage plans as a means to save money. This can certainly be utilized, but it may be better to factor the length of the mortgage. Try to cut down as much as possible on your monthly payments with a shorter mortgage, and you could end up saving more money than you imagined.
You need to take a good look at the state of your finances if you wish to make the best decision - fifteen or thirty years? What works with some may not work with you. Determine first whether you can handle the fact that you'll be paying more if you choose a shorter mortgage term. 15 year terms, generally speaking, have payments set 20 to 25 higher than 30 year terms. The good thing about larger payments is that you will be building equity and paying off the loan faster.
In today's mortgage industry, there are different term lengths aside from the 15 and 30 year terms. Before you even apply for a loan, check your options carefully to determine whether the mortgage would suit your needs perfectly.