Tuesday, April 15, 2014

What is the difference between a 15-year and a 30-year fixed mortgage?

Lately we've had a lot of questions from our buyers about the differences between a 15-year and a 30-year fixed mortgage. 

In a nutshell, the biggest difference is in the interest rate that will be charged and in how long it takes to start paying toward the principle of the loan. For both of the common fixed terms, the biggest key is that housing costs won’t be affected by interest rate changes and inflation.
A 30-Year Term: In the first 23 years of the loan more interest is paid off than principal - meaning larger tax deductions. As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses.  Yes, you are paying a LOT of interest at the beginning.
A 15-year Term: Loan is usually made at a lower interest rate. Equity is built faster because early payments pay more principal. And the loan is paid off earlier.  
Of course, compare payments, principal and interest totals to make a decision.  

If you'd like to leverage our mortgage expertise, call the Claus Team today at 210.566.6355 and let us put you in touch with our preferred lender, who can give you details about all of the financing options available to you. 

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