Getting ready to apply for a first-time home loan? One of the most important decisions you’ll need to make is whether to go with a 15-year mortgage or a 30-year mortgage.
Many people choose to pay on their mortgage loans for 30 years – some even think that a 30-year term is required for first-time buyers. The truth is, the standard length for home loan is not set in stone. You can, if you like, choose to pay off your loan in half the time with a 15-year mortgage.
Deciding on the right term for your first-time home loan requires careful thought. To figure out if you should take out a 15-year or 30-year mortgage, consider the advantages of each term option.
Benefits of 15-Year Mortgages
A 15-year home loan comes with several plusses. The advantages of choosing this mortgage term length include:
- Paying off your mortgage more quickly – When you no longer have a loan payment, you can make easier preparations for retirement, work shorter hours and enjoy greater financial freedom.
- Paying less interest – With a 15-year mortgage, you’ll put less money toward interest. Depending upon the amount you’re financing, this could add up to tens of thousands of dollars in savings.
- Building home equity faster – As your loan balance decreases, your equity grows. This occurs with any home loan, but the rate is much faster with a 15-year mortgage.
Benefits of 30-Year Mortgages
Though a shorter first-time home loan term can be advantageous, taking out a traditional 30-year mortgage can be a smart move for many first-time buyers. The benefits of choosing a 30-year term include:
- Having a lower mortgage payment – With a longer term, the monthly payments are more affordable. Keeping the payments low can make budgeting both easier and less stressful.
- Freeing up money for other goals – By paying less on your home loan each month, you’ll be able to pay down debts, make home improvements and increase your savings. You can make higher payments if your budget allows, but you have the freedom to choose when to pay more.
Which Mortgage Term is Right for You?
The term length of your first-time home loan term will have a long-lasting impact on your personal finances.
Before making a decision between a 15-year mortgage and a 30-year mortgage, take a good hard look at your money situation. If you don’t have much in the way of extra income or savings, a shorter term with a higher monthly payment may not be in your best interests.
Also, consider your future goals. If you’re confident you can afford a higher mortgage payment and you’d like to eliminate your home loan soon to free up funds for the next stage in your life, a 30-year mortgage might be the right choice.
Not sure which mortgage term length to choose? The highly-experienced loan officers at Integrity First Lending can help you compare your options and find a favorable first-time home loan.
Integrity First Lending, serving the greater Salt Lake City area and the surrounding northern Utah communities, is here to guide you through every step of the mortgage process. For expert advice and answers to your questions about first-time home loans, contact our South Jordan or Tooele office today.