When you are purchasing a new home, there are several steps that you must follow before closing. While it may appear quite complicated and daunting to get a mortgage, a basic understanding of the overall process can make it easier. Following is a walk-through and tips regarding the mortgage process to get you started: Read more
Parts of a Home Mortgage Plan
Financial experts recommend opting for a home mortgage plan even if you have the financial ability to make the entire cash payment. A mortgage plan provides additional protection to the real estate transaction since banks, title companies, and other authorities also become part of the process. Read more
Difference Between 15-Year Vs. 30-Year Fixed Loans
When you take out a mortgage, options are to choose between fixed-rate mortgages and adjustable-rate mortgages. Fixed-rate mortgages interest stays the same for the entire life of your loan. In contrast, adjustable-rate mortgages have interest rates that change according to external market conditions.
Virtually all home loans are “fixed rate,” but they can be either short- or long-term loans. If you’re planning to buy a property, refinance your current mortgage, or consolidate debt, knowing the difference between 15-year fixed vs. 30-year fixed loans can help you make an informed decision.
Key differences between these two mortgages:
Length of the Repayment Period
Your monthly repayments will be higher than with a 30-year loan, but you’ll pay less total interest throughout the loan. This means you’ll own your home sooner and can potentially make a much larger payment towards equity, as the interest will build up over a shorter time.
A 15-year loan is often referred to as a “half-a-loan” because you’ll make half the number of payments you would with a 30-year loan.
Interest Rates
The interest rate on a 30-year fixed mortgage is always lower than that on a 15-year fixed mortgage. That’s because a borrower who opts for a 30-year term commits to paying the loan off in half the time so that they can expect a lower interest rate as compensation for the increased risk of such a long-term loan.
The interest rate on a 15-year fixed mortgage, by contrast, is generally higher than that charged on a 30-year fixed mortgage. That’s because the shorter term makes it less risky for lenders, so they are willing to charge a higher interest rate.
Mortgage Insurance
If you take out a 30-year fixed mortgage, your monthly repayments will be lower than an equivalent 15-year fixed mortgage. That means you’ll have more money available each month to pay your property taxes and insurance premiums at the start of your mortgage term, which will significantly reduce the amount of mortgage insurance you’ll need to pay.
However, this comes at a cost: Longer-term mortgages are riskier for lenders, requiring mortgage insurance. Your mortgage payments will include monthly MIP premiums, also called private mortgage insurance or PMI.
Why Bother With 15-Year Fixed vs. 30-Year Fixed?
As you can see, fixing the interest rate on a home loan for longer-term will result in a lower monthly repayment. This can be of major benefit to many borrowers.
One significant advantage is that you can afford a larger home by stretching out the loan term and still keeping your monthly repayments low enough to manage.
The biggest benefit of a 15-year fixed mortgage for many borrowers is that your monthly repayments will be lower than if you took out a 30-year fixed loan.
Banks typically require you to pay higher MIP premiums when you don’t have much to put down as a down payment or if your credit history is marred. A 15-year term allows you to put off paying higher premiums in the short term, even though your monthly premiums will be larger in the long term.
Contact Pacific Lending Group to Make the Right Choice
Pacific Lending Group has an extensive track record delivering competitive interest rates for 15-year and 30-year fixed loans to all credit profiles. Contact us today at 954-227-4727
Home Buying Florida and Mortgage Loans
Purchasing a home is an important decision and a milestone in your life to achieve. Knowing the steps to take during this process can be overwhelming, as you are committing to a hefty financial commitment, so knowing where to begin and how to complete this journey makes all the difference.
Home buying can be stressful, but having a lender that you can trust makes your journey a lot easier and more enjoyable. Pacific Lending Group has been helping Florida residents for the last several years, and we make it a point to help guide you on your way to homeownership. Our trusted staff and many resources can easily help you on your way.
First-Time Home Buying
It can be overwhelming to understand all the mortgage options that are out there. Pacific Lending Group makes the pre-qualification process easy and stress-free, with no added cost to you. We have highly competitive rates and make the journey of home buying one that will result in a wonderfully happy ending. Choosing your first home can feel overwhelming and stressful.
Some factors come into play for each family searching the market. Size and price are two main components for choosing the home that will best suit your family. When buying your first home, features, floor plans, and location are also important things to think about. We help Southern Floridians get set up for success when buying the home of their dreams. There are tips and tricks to ensure that you find the home that is best for you. Pacific
Lending Group has professionals ready to get you on the right path and help carry some of the stress that comes with buying a new home. First-time buyers often rush into choosing a home, but taking your time and finding the right location, floorplan, and style is important. Taking a steady pace will ease your mind and give you time to acquire the home that best fits your family.
Let Pacific Lending Group help you with all of your lending and mortgage needs. Buying a home for the first time can be scary and seem daunting, but knowing the proper information to get on the right path will make all the difference. Explore your home mortgage options with us and get started on the path to homeownership. Call today at 954-227-4727
How to Prepare as a First Time Home Buyer?
Buying a home for the first time can be a challenging and frightening experience, considering all the potential mistakes that can happen, leading to property loss. That’s why it is essential to prepare as a first-time home buyer with the help of a financial counselor. Read more