Steven Linton

NMLS # 355220 CA DRE:00885452

949-734-5800

SLinton@LamCap.net

Steven Linton Regional Manager

Should I Go with a 15-Year Fixed or 30-Year Fixed Loan?

Should I Go with a 15-Year Fixed or 30-Year Fixed Loan?

Should I Go with a 15-Year Fixed or 30-Year Fixed  In the past, most would probably go with a 30-year fixed-rate loan. With interest rates are so low at the moment, is it time to consider a 15-year loan instead? What are the differences, and which one is the best fit for you?

What’s the Difference Between the Two?

The big differences between the two loans are the number of payments and the amounts of those payments.

With a 15-year fixed loan, you will have 180 total payments, while a 30-year fixed loan will have 360 payments. This means that if you were to borrow $100,000, the 15-year loan payments would be higher every month than the 30-year loan because you are paying more of the principal each month to pay it off in a shorter time frame.

How Do Interest Rates Come Into Play?

Generally, interest rates on 15-year loans are lower than they are 30-year loans. But why is that?

It all comes down to the risk that the lender is taking on. If your lender is loaning you money for 15-years, it’s less likely that you will default on that loan over the long haul. While a lot can happen in 15 years, 30 years means the private lender is assuming a lot more risk than a shorter time frame.

So, Which One Should I Choose?

Honestly, it depends on what your financial situation is. A 30-year fixed-rate loan tends to have lower monthly payments and, of course, a longer life. This rate tends to make sense for most new homeowners, even though the interest rate is higher, and you’ll be paying on it for longer.

A 15-year fixed-rate loan usually makes a little more sense for those who are buying their second or third home and are a little more financially stable. This is because 15-year loans have higher monthly payments, but also build equity quicker and have a lower interest rate.

We know that loan-talk can be quite confusing, but it’s a large and essential part of the home buying process! The best way to figure out which type of loan is best for you is by talking to a professional, so contact LamCap Partners at 888-472-3330 or SLinton@LamCap.net today if you have any questions!

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