The Mortgage Show-Down: 15 Yr. Vs. 30 Yr.

Buying a home in the Cedar Rapids area may be a nerve-wracking experience for most people.  The decisions that you make with regard to that initial loan can haunt you for years, and years… and years to come.

 Choosing the length of a home loan can be a daunting decision.

 Most of us have only ever heard of the 30 year mortgage. Just hearing that length of time invokes visions of grown children and even wheelchairs for some while writing that last painful mortgage payment check. But the recent historically low interest rates have brought some buyers over to the shorter, less-painful-sounding 15 year mortgage. These loans typically carry a lower rate of interest than a 30 year mortgage but a much higher payment.

 The advantages of the 15 year mortgage are certainly appealing. Now that interest rates are in a place that make these loans more doable for the average American they are becoming a hot option, especially in the refinancing market. 15 year loans, while carrying a higher payment, save the homeowner thousands of dollars in interest over the life of the loan. In fact, according to a recent article by, using a median priced home of $366,930 as an example, a homeowner could save up to $117,000 by choosing a 15 year mortgage over a 30 year. In some markets that’s a whole other house worth of savings! These loans also allow the homeowner to build equity more quickly.

 But the 30 year mortgage is not without its classic merits as well. This type of loan allows buyers to spread their mortgage out over a longer period of time, meaning much lower monthly payments. Lower payments allow homeowners to put more into their savings rather than having their capital tied up in their property. After all, accessing the equity in your home can be a costly business in and of itself. Either you must sell the property, meaning payment of pro-rations and likely real estate fees, or you can take out a home equity line of credit, which usually carries some lending fees of its own. Some homeowners prefer to simply place their money in an account where it can be accessed anytime they need it without cost.

 Choosing the mortgage option that’s right for your family requires some serious consideration. The right answer varies with each buyer’s unique circumstances and needs. But whatever you choose you can be certain to get a good rate these days, making home buying more affordable.

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