PAUL MATADEEN, LICENSED REALTOR | ATLANTA & NORTHERN GEORGIA | SALESWITHPAUL.COM
  • Home
  • What's My Home Worth
  • Search Online
  • Let's Chat
  • News & Updates
  • Videos
  • Video Tours
  • Buyer's Guide
  • Seller's Guide
  • Moving Guide
  • Homeowner's Tax Guide
  • Home Inventory
  • Ready To Sell

Depends If You Can Afford It

3/1/2019

0 Comments

 
Picture
Affordability, stability and flexibility are the three reasons homebuyers overwhelmingly choose a 30-year term.  The payments are lower, easier to qualify for the mortgage and they can always make additional principal contributions.

However, for those who can afford a higher payment and commit to the 15-year term, there are three additional reasons: lower mortgage interest rate, build equity faster and retire the debt sooner.

The 30-year, fixed-rate mortgage is the loan of choice for first-time buyers who are more likely to use a minimum down payment and are concerned with affordable payments.  For a more experienced buyer who doesn't mind and can qualify making larger payments, there are some advantages.

Consider a $200,000 mortgage at 30 year and 15-year terms with recent mortgage rates at 4.2% and 3.31% respectively.  The payment is $433.15 less on the 30-year term but the interest being charged is higher.  The total interest paid by the borrower if each of the loans was retired would be almost three times more for the 30-year term.

Let's look at a $300,000 mortgage with 4.41% being quoted on the 30-year and 3.84% on the 15-year.  The property taxes and insurance would be the same on either loan.  The interest rate is a little over a half a percent lower on the 15-year loan, but it also has a $691.03 higher principal and interest payment due to the shorter term.

The principal contribution on the first payment of the 30-year loan is $401.56 and it is $1,235.09 on the 15-year loan.  The mortgage is being reduced by $833.53 more which exceeds the increased payment on the 15-year by $142.50.  Interestingly, over three times more is being paid toward the principal.

Some people might suggest getting a 30-year loan and then, making the payments as if they were on a 15-year loan.  That would certainly accelerate amortization and save interest.  The real challenge is the discipline to make the payments on a consistent basis if you don't have to.  Many experts cite that one of the benefits of homeownership is a forced savings that occurs due to the amortization that is not necessarily done by renters.

Use this 30-year vs. 15-year financial app to compare mortgages in your price range.  A 15-year mortgage will be approximately half a percent cheaper in rate.  You can also check current rates at FreddieMac.com.

Source: BetterHomeowners.com
Reposted with permission.


The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Paul Matadeen and Better Homeowners do not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Paul Matadeen and Better Homeowners. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

0 Comments



Leave a Reply.

     
    Picture

    Sales!
    with paul
    .

    404.444.1984 cell
     

    Archives

    March 2021
    July 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018

     

    Categories

    All
    Berkshire Hathaway HomeServices
    Buyer Tips
    Closing Costs
    Conventional Loans
    Credit Score
    Down Payment
    Escrow
    FHA Mortgages
    FICO Score
    Financial Planning
    Financing
    Home Improvements
    Home Ownership
    Home Partners Of America
    Interest Rates
    Investing
    Just Sold
    Kennesaw
    Lease To Own
    Listings
    Loans
    Marketing
    Mortgages
    Mortgates
    Net Worth
    New Construction
    Open House
    Recommendations
    Retirement
    Roswell
    Sales
    Seller Tips
    Selling My Home
    Taxes
    USDA Mortgages
    Veterans
    Video Open House
    Videos
    Warren Buffet

    RSS Feed

Powered by Create your own unique website with customizable templates.
  • Home
  • What's My Home Worth
  • Search Online
  • Let's Chat
  • News & Updates
  • Videos
  • Video Tours
  • Buyer's Guide
  • Seller's Guide
  • Moving Guide
  • Homeowner's Tax Guide
  • Home Inventory
  • Ready To Sell