03 Mar Choosing the Best Loan Term For You
When selecting a term for your home mortgage, there is no one-size-fits-all answer. At Fairway Independent Mortgage Fort Lauderdale, we’re happy to review your financial details and create the perfect loan for you! In the meantime, we’ve gathered some helpful tips to consider when beginning to plan for your new loan term. The choice should be based on a variety of factors and tailored to your specific situation.
The first step in determining which mortgage term is best for you is to make sure you have a clear financial goal. For instance, if you’re hoping to contribute a large portion of your paycheck to your retirement fund, you’ll want your mortgage payment to be on the lower side, and a 30-year would likely be your best fit. If your biggest monthly monetary contribution will go toward your mortgage, you might want a shorter term in order to reap the additional benefits of a 15-year loan.
The interest rate offerings on 15-year loans are typically lower than those on a 30-year. In addition to the immediate savings, the interest paid over the life of the loan is less on a shorter term. To make an informed decision and oversee the loan balance and interest payments throughout the life of both loans, consider taking a look at an amortization table with your loan officer.
The most important factor to consider is your budget. Whether you are looking to become debt-free as quickly as possible or seeking the lowest possible monthly payment, your financial standing will help determine whether a 30-year or 15-year works best for you.
Depending on other factors such as your income, the monthly payments with a 15-year term could be a stretch, whereas a 30-year term could lower your overall monthly payments. If you do not have an emergency savings account, it would be best to consider one so that you do not overstretch your monthly budget, leaving no room for surprises.
If you don’t feel comfortable fully committing to the higher payment option of a 15-year loan, you can still save money in interest payments over the life of the loan by paying extra each month on a 30-year. You can calculate your payments as though you chose a 15-year, and then make payments of that amount unless a life issue precludes you from doing it.
Give us a call today to discuss your options! Our seasoned loan officers are happy to walk through many scenarios to help you find the perfect fit.