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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

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A Refinance Mortgage Can Affect Your Credit Score?

Refinancing may seem like a viable credit financing option in many circumstances. It involves replacing an existing loan with a new loan using the fresh mortgage to pay off the first one. Borrowers often choose loans with lower interest rates to refinance old loans. Also, a refinance mortgage allows borrowers the freedom to channel more savings into their savings account. Read more

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What You Should Know About Mortgage Refinancing

Buying a home involves various financial obligations, and you may have taken out a mortgage to help pay for your home. However, with fluctuating interest rates and an unstable financial outlook, you might be looking to adjust your current home mortgage with one that is more flexible to your requirements.
Refinance mortgage is an ideal option for many homeowners, whether they’re looking to free up some money or want to shift from an adjustable rate to a fixed rate. Here is what you should know about mortgage refinancing before you get started:

What is Mortgage Refinancing?

Mortgage refinancing is when you get a new home loan to replace the existing mortgage on your property. It may be due to various reasons, like you might be getting a lower interest rate than what you’re paying for your current mortgage, thereby saving money.
While mortgage refinancing can sound complicated, it is quite simple to get started if you’re working with a trustworthy home mortgage company.

When Should You Get One?

Several reasons may prompt you to get mortgage refinancing, and these include:
If you’re getting a lower interest rate on your new home mortgage

If you want to shift from a fixed-rate mortgage to an adjustable-rate mortgage, and vice versa
When you want to shorten the repayment period of your mortgage, or conversely, you are looking for a 30-year mortgage plan to replace your existing 15-year mortgage.

If you’re looking to consolidate your debt or have a sudden financial emergency
Depending on your current financial situation, refinancing may not be the best option for you. It can cost anywhere between 3% to 6% of your loan’s principal amount and has separate application fees.

How to Start

If you’re considering refinancing your home mortgage, you should have a clear reason for doing so. Whether it is to save money or extend your repayment period, you need to be clear. You will need to check your credit score and history to ensure that you can get good rates for your refinancing.
When you don’t have a good credit score but are refinancing to get lower interest rates, it might be worthwhile building your credit score for a few months first. You will also need to determine your existing home equity. When you have more equity on your home, the lender will determine your refinancing is less risky, which can make it more favorable for them.

Working With the Right Experts

Ensuring that you get the best refinancing plan for your home is essential, and you will need to look for a good and experienced mortgage refinancing business in South Florida. It’s best to discuss with your lender the possible options, so you can lock in your rate before it goes up.

Looking for Reliable Mortgage Refinancing? We Can Help

When you’re in South Florida looking for the best mortgage refinancing plan for your needs, Pacific Lending Group is here to help. Our business has maintained an A+ rating from the Better Business Bureau for years, which shows our commitment to our customers and our dedication to serving your needs. Refinancing doesn’t need to be a stressful experience, and we can simplify it for you with the help of our experts. Call us at (954) 227-4727 to schedule an appointment.