30 Year Mortgage vs. 15 Year. When Buying a New Home, Which is Better?

“Should I go with a 30-year mortgage and have a lower monthly payment, or should I go with a 15-year mortgage and pay off the loan much faster?”

And the answer, like so many other times before is:

“It depends”

​Let’s look at the numbers, shall we:
Let’s assume that you are taking out a loan amount of $100,000. 
The interest rate on the loan will be a 4% fixed rate.

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If we go with a 15 year loan, then your monthly payment, not including taxes or insurance, will be $739.69. Not bad, and in 15 years, you will own your home outright, with no monthly mortgage payments.  Doesn’t that sound wonderful?

However, that same loan paid out in 30 years instead of 15 will bring your payments, not including taxes or insurance, to $477.42.  Whoa! That’s a difference of $262.27 a month. No, you won’t payoff the house in 15 years, but you will have more money every month to put towards other things, and that might make life a lot easier for you.

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​This does not take into account that most lenders offer 15 year loans at a lower interest rate, but you still get the general idea.

​Of course a 30 year loan gives you flexibility in that, you can take out a 30 year loan, but then make monthly payments that reflect what a 15 year mortgage payment would be. That way, you can still pay your loan down quicker, but if life happens, and you cannot afford that higher amount for a little while, than you just pay the 30 year rate until you get back on track. ​

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Did I answer your question? No.  Like I said, the answer is, “it depends”. But I hope that I at least gave you some food for thought. In the meantime, check out my website and start looking for that perfect home. 
BuyNSBhomes.com