Planning on staying in your home for many years to come? A 30-year loan has many advantages for people looking for lower and consistent monthly payments. While many people don’t expect to stay in their homes this long, they can still take advantage these benefits before selling or refinancing.
Although 30 years of debt may seem like a long time, it can be a smart choice for the budget conscientious. Home loans are traditionally 30 year mortgages and benefit those on tighter budgets looking for lower monthly payments.
Payments & Interest
With a fixed-rate mortgage, monthly payments never change, which can be ideal for household budgeting. The longer term of 30 years (compared to a 15 year mortgage) means that the monthly mortgage payments are usually lower, resulting in extra finances to pay off debts, go into savings, make home improvements or even pay off more of the principal at your convenience.
Life situations can change in an instant, though, so make sure that you know whether or not your loan allows you to refinance at a later date.
Equity is the amount of the house that you outright own. Each time a payment is made to the mortgage, the loan is lowered and the equity goes up. This is simply because the home buyer now owns more of the home and owes less. Equity is determined by a home’s value minus what is owed to the mortgage loan. A 30-Year mortgage builds home equity slowly over time but when the loan is paid off, the home will be owned outright with high equity for the home owners.
If you feel a 30-Year Fixed-Rate Mortgage may be right for you or if you have questions please contact us.