As a first-time homebuyer, you may ask: Should I take a 30-year or 15-year home mortgage? The answer is not that simple, as it depends on each individual’s needs and situation. Hopefully, the information we provide can help you make a decision.
30-Year Home Mortgage
The 30-year home mortgage is the most popular option for most homebuyers. With this option, your monthly payments are lower, as they are stretched out over a longer period of time. This allows you to increase your homebuying budget, which means you can afford a larger home or put more money into savings for unexpected emergencies.
The downside, however, is that you will be paying more in interest over the life of your loan. Currently, the average interest on a 30-year home mortgage sits at 4.3% fixed rate, while a 15-year home mortgage is only 3.5%.
15-Year Home Mortgage
The obvious benefit of a 15-year home mortgage is that you will pay off your home in half the time, becoming debt free much more quickly. You will build your home equity much faster. Your overall interest payments will also be much lower, because they will be stretched over a shorter time period.
The disadvantage to the 15-year mortgage is you’ll be making monthly payments that are about double the amount of a 30-year mortgage. Since you will be paying off your home twice as fast, the amount you owe on a monthly basis is greater.
Which Is Best for You?
The answer to which type of mortgage you should choose is not black and white. It greatly depends on your current situation and budget. How much can you afford? Do you have college debt to pay off? How stable is your employment? These questions and more should be answered before your final decision is made.
As a local bank, we know Darke and Mercer counties. We know the people. We know the housing stock. Wouldn’t you rather finance your home purchase with a bank that knows you? Call 877.672.4543 to speak with a mortgage loan officer, fill out our online mortgage application or visit a Mercer Savings Bank location near you today.