Considering Alternatives In Mortgage Interest Rates, Home Loan Rates
By Stephen Campbell
It used to be the first choice of majority borrowers, because since the total payments are spread over a longer range of time with the mortgage interest rates set for the entire time of mortgage. 30 year home loan rates are an industry standard but is it the right option for you?
As we discussed, the advantage side for a 30 year home loan is lower monthly payments. This attraction is somewhat dimmed by the truth that you pay thousands extra in interest. However, your interest is 100% tax deductible which does reduce your after tax cost. It provides you some flexibility so that if your financial condition changes and you have more money you can pay it off in less than 30 years, this while keeping the low monthly payments and mortgage interest rates. Your payments are smaller so in reality you can buy a larger roomier home.
To give you an example of the interest difference between 30 year home loan rates and one of the other rates. On a 30 year, 100,000 dollar loan utilizing 7% interest rate your monthly obligation of interest and principle would be $665.30. Over the next 30 years you will have a payment of $139,511.04 in interest alone. On the other hand, with a 15 year home loan rate on the same amount you will pay $871.11 per month and over the next 15 years, you would pay $56,799 in interest. This would make a saving of $82,712 for you.
If you have the will power to invest the savings from the monthly payments, it still could be a good decision to go with the 30 year mortgage. Particularly if you can find an investment that the long term payoff matches or exceeds what you would save in a 15 year mortgage. Another constraint to consider is how fast you want to accrue equity in your home or to own it out right. 30 year home loan rates take much longer to have equity built.
30 year home loan rates are certainly attractive and the vast majority of home buyers acquire 30-year loans because that is the longest home loan available in the present time. Experts agree if they could acquire a 35- or 40-year loan, they probably would. There are several other alternatives to consider. Probably the biggest question you have to ask yourself when trying to consider a loan is what are your financial goals? What loan plan will help you the most to reach that plan? It is clearly to your advantage to look into other personal loans or home loan alternatives for the best loan available for you and your financial goals. It may surprise you that because of your personal situation there may be other plans more advantageous for you.
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