30-Year Mortgages - Are They Right For You?

30-Year Mortgages

30-Year mortgages used to be the first choice of most borrowers, since the total payments are spread over a longer period of time with the interest rate set for the entire time of the mortgage. 30 year home loan rates are an industry standard, but is it the right choice for you?

The plus side for a 30 year home loan is lower monthly payments.  This attraction is somewhat dimmed by the fact that you pay thousands extra in interest.  But, your interest, in most cases, is 100% tax deductible which does lower your after tax cost.  It offers you some flexibility so that if your financial situation changes and you have more money you can pay it off in less than 30 years while keeping the lower monthly payments.  Your payments are smaller so in reality you can purchase more house.

If you have the will power to invest the savings from the monthly payments, it still could be a good choice to go with the 30 year mortgage.  Especially if you can find an investment where the long term payoff matches or exceeds what you would save in a 15 year mortgage.  Another factor to consider is how fast you want to accrue equity in your home or to own it out right.  30 year home loan rates take much longer to build equity.

There are many other options to consider. Probably the biggest question you have to ask yourself when considering a loan is what are your financial goals?  What loan plan will help you the most to reach that goal?  It is clearly to your advantage to look into other loan options for the best loan available for you and your financial goals.  It may surprise you that because of your personal situation there may be other plans more suitable for you.  Talk to your Buyer’s Agent about which loan is best for you.