So you’ve made plans to buy your California dream home. You’ve done all of the twists and turns of home loan approval path and you’re approved. Congratulations! You’re now a homeowner. Do you love your new home? Good, because you should. You’ll be paying on it for quite some time. It’s probably a safe bet that your mortgage company isn’t as attached to your new home as you are. So, deciding how long you want to have a “marriage of payments” to your mortgage company is an important one.
Most companies offer 15-year mortgages and 30-year mortgages. Which is the best solution for you? First, you need to compare your options. Most of the time, mortgage companies will offer a cheaper interest rate for a 15-year mortgage than a 30-year mortgage because they receive their repayment back sooner. If the mortgage company does cut rates for shorter mortgages, then that’s certainly an option to consider. If not, then you may want to research further. Also, you should note that you will have less expensive payments if you consider a 30-year mortgage. But remember, those lengthy payments total up over time.
What will be the total amount you’ve paid toward the home at the end of the 30-year repayment schedule? Now compare that to the 15-year mortgage. Quite a difference, isn’t it? In some cases you could spend up to $100,000 more when you select a 30-year mortgage versus a 15-year mortgage. Most people simply don’t have $100,000 extra to invest in a home. However, if you simply can’t afford a 15-year mortgage payment, then it is up to you to as what you can afford. Remember, no one knows your budget and lifestyle better than you. Enjoy that new home.
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