15 vs 30 Year Mortgage – The Pro’s and Con’s(1)
15 vs 30 Year Mortgage
If you’re like many homeowners you’ve probably contemplated going with a 15 year mortgage vs the more common 30 year fixed program. So what are differences and I can I get a better rate by going with a shorter term? Below are some pro’s and con’s associated with the 15 vs 30 year mortgage programs:
15 vs 30 Year Mortgage – The Rate Difference:
The up side of going with a 15 vs 30 year mortgage is that the 15 year mortgage will come with a bit lower rate. For example, today the average 15 year mortgage would go for about 3.25% while its 30yr counterpart would go for 3.75%. Rates on the 15 year mortgage are lower because the lender is theoretically taking on less risk by having its money out there for a shorter period of time. As a rule of thumb, the shorter the term of the mortgage, the lower the rate will be.
15 vs 30 Year Mortgage – Monthly Payments
One important factor to consider when weighing out the pro’s and con’s of a 15 vs 30 year mortgage is the monthly payment. Payments with the 15 year mortgage are going to be much larger than the longer term since the loan repayment is spread over half the number of months (180 months vs 360 months). It’s therefore sometimes more difficult to qualify for a 15 year mortgage in regard to DTI (debt to income ratio) because you will need to have a relatively high amount of monthly income to support the larger payment associated with a 15 year mortgage vs its 30 year counterpart.
15 vs 30 Year Mortgage – Total Cost Comparison:
If you have sufficient income to support the larger payment that comes with the 15 year mortgage, it may very well be worth consideration since the total interest paid within the 360 payments associated with the 30 year mortgage is much more costly than that of the total interest paid within the 180 payments associated with the 15year mortgage. The total paid on either mortgage is shown on the TIL (Truth In Lending) document which is included in your loan application package as well as again at closing. Many consumers are shocked to see how much their home will ultimately cost by the end of the repayment term. This is perhaps the most compelling reason to consider a 15 year mortgage if you can handle the larger monthly payments.
Author “Joe Mortgage” is a mortgage industry leader who is owner of hotratequote.com and is committed to bringing readers relevant and important information. Find out more at the following link for a expert consultation on considering a 15 vs 30 year mortgage.
Harp 2.0 – Making Home Affordable Refinance Program – Valiant Enough Effort?(2)
Making Home Affordable Refinance Program
Many homeowners have been inquiring about how the new “Making Home Affordable Refinance Program”, also known as “HARP 2.0”, can benefit them. So what can Making Home Affordable do for you? In short, this newer version improves on the initial HARP program by removing the 125% LTV limitation. However, there don’t seem to be any of the “big banks” who are servicing the majority of the country’s existing mortgages stepping up and actually adopting these new capabilities, unless that is, you already have your loan with them.
Making Home Affordable Refinance Program – Who gets access and it enough?
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