by Dell Claiborne
What are the advantages of 15 and 30 year loan terms?
There are definite advantages to both the 15 year fixed rate mortgage and the 30 year fixed rate mortgage. Fifteen year mortgages tend to have lower interest rates, which is great. By choosing the shorter term you also put yourself in position to build more equity faster and to own your home outright sooner. When you’re weighing your options, be aware that with the shorter mortgage, your monthly payments will be higher. Some would say that the higher payments are a disadvantage, but I think that depends on your specific financial situation. If the higher payment doesn’t put additional financial strain on you, then a 15 year mortgage may be a good option for you.
The advantage of the 30 year mortgage begins with the payments. By spreading your payments over a length of time, they will be substantially lower than with a 15 year mortgage. Many financial advisors will tell you that by making lower payments you put yourself in position to use the extra money to pay down other debt or to use for other investments. This can contribute to greater long term financial health. The 30 year mortgage also give you longer to take advantage of tax deductible mortgage interest payments. When choosing mortgage terms you must compare and choose which best fits your individual situation. I also encourage you to seek out mortgage and lending professionals and ask questions until you are confident in your knowledge to make an informed decision.