Should You Get A 30 Year Home Loan?  A 30 year mortgage loan has always been popular and used to be the first choice for the majority of borrowers, because the payments are spread over a long period of time and the interest rate can be set for the entire life of the mortgage. The 30 year home loan rates are a standard figure the industry offers but you should check if it is the best option for you. The benefit of a 30 year home loan is lower monthly payments spread over a long period. This sounds good but you pay thousands extra in interest because the loan rate is fixed for a long time. If your interest is 100% tax deductible it can lower your after tax cost and it does allow some flexibility in that if your financial situation changes and you find yourself better off you can pay it off in less than the 30 year period. You have this longer term option meanwhile you have the low monthly payments and since your payments are smaller you may find you can purchase a larger and roomier home. If we look at an example of the interest difference between a 30 year home loan rate and another alternative rates we find that a 30 year, 100,000 dollar loan using 7% interest rate your monthly payment of interest and principle would be $665.30 dollars. This means that over a period of 30 years you will have paid $139,511.04 in interest alone. If instead you chose 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 and this would save you $82,712. What this means is that if you have the determination and the will power to invest the savings you make on the monthly payments, it still could be a good choice to go with the 30 year mortgage. Especially if you can find an investment that the long term payoff matches or exceeds what you would save in a 15 year mortgage but there are always risks with investments. One other factor you might want to consider is how fast you want to accrue equity in your home to own it outright. A 30 year home loan rate will take you much longer to build up your equity. 30 year home loan rates are an attractive option and the vast majority of home buyers get a 30 year loan because that is the longest home loan available today. Experts agree if they could get a 35- or 40-year loan, they probably would. There are many other options to consider and it is probably the biggest question you have to ask yourself when you are considering a loan. You must decide exactly what are your financial goals and which loan plan will help you the most to reach that goal. It is clearly to your advantage to look into other loan options for the best loan available for you and your financial goals. Our personal situations are all different so it may be that the best choice will surprise you with another plan which is more suitable for you.

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Filed under: Mortgages

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