When choosing the type of mortgage you want to purchase your home with, most applicants have an option between a 15 year and a 30 year mortgage plan. Although the structure of both 15 year and 30 year mortgage strategies are the same, there are some considerations to keep in mind before selecting a mortgage plan.
With mortgages, time has a great impact on the final cost – in a 30-year period, the payable balance reduces in a slower manner than that of a 15-year period. This means that the principal balance declines at a faster pace in the 15-year period. The interest rate might not seem to create much difference, but variations of just a few points can result in the savings of thousands of dollars. Mortgage calculators can provide an accurate assistance in this regard.
The selection of a mortgage plan is also dependent upon the savings an individual might want to retain. With a 15-year mortgage, it might not be possible for a person to save a significant amount of money considering a higher monthly installment. However, it can be comparatively easier to have some savings with a 30-year mortgage because of lower monthly installments. Keeping a reserved savings can be an important determinant as far as the selection of a mortgage plan is concerned.
In the end, whether it is a 30-year mortgage or a 15-year mortgage, they both have their benefits and drawbacks. Contact a member of our Mortgage Team to learn more about the difference between the two, what you can afford and more!
