Many borrowers believe that the most important question when buying a home is â€śWhere should we live?â€ť In reality, this is one of the last questions that borrowers should ask. One of the most important questions borrowers need to ask themselves is â€ś30 year or 15 year mortgage?â€ť Utah residents find that choosing isnâ€™t always easy; many borrowers arenâ€™t sure why it is important, so we will cover that information here in this article.
Should I Take a 30 Year Mortgage Loan?
Right now many borrowers are concerned about having jobs and where the economy is headed. With that being said, many borrowers that are planning to refinance are more than likely planning to take a 30 year loan over the 15 year mortgage. Utah residents are now seeing the effects of the housing market, and are thinking about these same issues, but battle with the thought of paying more over the life the loan than they would if they took the shorter term. The 15 year mortgage is a shorter term, but because the payments are larger, equity in the home will be built much quicker. Every family has a different financial picture, and therefore each family has to decide what is best for them.
Why a 15 Year Mortgage Is a Good Thing
Everyone knows that paying off debt faster is the best way to live life, and can boost your credit rating in the process. Life isnâ€™t perfect and sometimes families have to go to plan B and consider the alternatives. There may be other uses or needs for that additional money that a borrower saves by taking the longer term on their mortgage, and if things are tight when buying a home than taking a 30 year mortgage is probably best.
Rates are also higher on the 30 year mortgage, and in the end the smaller payments may enable families to buy more house for a lower payment. Again, each family has different needs so deciding on what is important in a home will help make the final decision on the term of the loan. When owning the home outright is more important to a family and they have more disposable income, than they are more likely to choose the 15 year mortgage. Utah residents are anxious to build equity as soon as possible so that they can make that equity work for them. Equity in the home can serve a great purpose such as using the equity to get cash out for home improvements, or even to consolidate debt.
Financial planners usually try to get their clients to view their mortgage in the grander scheme of things, meaning that the loan should fit into a complete financial plan. The ability to save money and pay the mortgage along with all other monthly obligations is important. Ultimately, those consumers who have socked money away and have it in reserve are more likely to take the 15 year mortgage loan over the 30 year loan.