How Do You Decide
There are all types of mortgages, ranging from options with low down payments to jumbo sized loans. Other than deciding upon the mortgage type that suits you best, you will also need to define the period over which you wish to repay the entire loan amount, which is commonly known as the mortgage term.
To help and guide you in buying your home, our experienced lendmemoney.com affiliate lenders will be happy to offer you a number of different mortgage types available on the market today. The more popular ones however come with either a 15-year or 30-year repayment plan. If you are looking for a lower monthly payment, you will have to contend yourself with a 30-year home loan. Although, the 15-year mortgage term may have an overall higher repayment, it will reduce the term of your home loan by half, which will also reduce the total amount of interest that you will be required to pay to your lender.
To determine the type of mortgage that works out best for you and do a comparison of the total costs payable by you, simply fill out your details in the Mortgage Calculator of our lendmemoney.com affiliate lenders below.
30-Year Mortgage
Pros:
- Lower monthly payment
- To pay off faster, you can pay a higher amount than your required minimum
- With lower payments, you can qualify for a more expensive home
Cons:
- Compared to a short term loan, you will pay higher interest for the longer term
- Typically, a lower monthly payment means that it takes that much longer to build up your home equity
- Higher rate of interest (typically, the longer your term, the higher your rate)
15-Year Mortgage
Pros:
- Compared to a longer term, you will pay lesser interest
- Upon the repayment of your shorter term loan, you become the owner of your home
- Since getting to the 20% home equity threshold will now be quicker, you can now get rid of the private mortgage insurance (PMI) a lot earlier
Cons:
- Due to the shorter term, your monthly payments will be higher
- Availability of fewer funds for your monthly savings, due to your budgetary constraint
- Higher monthly payment may affect your affordability for the property that you would really want to go for