15 or 30 Year Fixed Rate Mortgage?

There is no shortage of decisions to be made when applying for a new mortgage loan. A common question mortgage professionals ask their home buying customers is whether they would prefer a 15-year fixed rate mortgage or a
30-year fixed rate mortgage. So how do you decide? Let’s review the major advantages of 15 and 30-year fixed rate mortgage loans.

Benefits of 15-Year Fixed Rate Mortgages

• Pay off Your Mortgage Faster – The sooner you pay off your mortgage loan, the sooner you will have more income at your disposal for retirement, vacations, etc.
• Save Money On Interest – The shorter your finance term, the less you pay in interest.
• Build Equity Faster – Equity is the difference between what your house is worth and what you owe. Home equity builds as your property value increases or your mortgage balance decreases. With a 15-year fixed rate mortgage – you are paying down your principal balance faster than you would with a 30-year fixed rate mortgage loan.

Benefits of 30-Year Fixed Rate Mortgages

• 30-year fixed rate mortgages have lower monthly payments which often outweigh the benefits of a 15-year mortgage. A 30-year fixed rate mortgage may be more desirable if you are on a tight budget and need more wiggle room for unexpected expenses. Additionally, lower fixed payments may enable you to pay off other higher interest debt, make home improvements, or save for a rainy day – which may not have been possible if you elected for the shorter 15-year mortgage term.
• Interest paid on a mortgage loan is tax deductible. Because 30-year fixed rate mortgages involve higher interest payments, this type of mortgage may be a better fit for people who need additional write-offs. For instance, high earners, self-employed people, and independent contractors may all benefit from a long-term mortgage. Even if you’re an employee with a modest income, you can still take advantage of a 30-year fixed rate mortgage to lower your tax liability. Consult your tax professional for more information on mortgage interest tax deductions.

Making Your Decision

Deciding between a 15-year mortgage and a 30-year mortgage is a major decision that will have long-lasting effects on your personal finances. Before settling on a term, consider your current financial situation and your long-term financial goals. Take into consideration your other debts and household bills.

If you are a first time home buyer, consider the amount of disposable income and personal savings you have. A 15-year mortgage can take a significant portion of your income, and if you don’t have a lot of extra income or a significant savings account, it’s likely in your best interest to skip the shorter term and stick with a 30-year mortgage.

15 and 30-year fixed rate mortgage are at all time record lows according to Freddie Mac. To take advantage of these record low rates, apply today or click here to located a licensed mortgage loan professional near you!

Inlanta Mortgage offers Fannie Mae/Freddie Mac agency products,  as well as a full suite of jumbo and portfolio programs. The company is  fully delegated HUD-FHA including FHA 203K, VA, and USDA approved.  Inlanta Mortgage also offers numerous state bond agency programs. Review Inlanta’s mortgage loan programs here.

Inlanta Mortgage is a multi-state mortgage banker based out of Brookfield, Wisconsin. NMLS# 1016. Inlanta Mortgage is proud to be a recent recipient of a 2012 Top Workplace Award.