The following table lists historical average annual mortgage rates for 15-year & 30-year mortgages. You can use the following calculators to compare 15 year mortgages side-by-side against 10-year, 20-year and 30-year options. The above calculations presume a 20% down payment on a $250,000 home & a closing cost of $3,700 which is rolled into the loan. Please note the above used interest rates were relevant on the day of publication, but interest rates change daily & depend both on the individual borrower as well as broader market conditions. The following table shows loan balances on a $200,000 home loan after 5, 10 & 15 years for loans on the same home. Those who build equity faster will have greater certainty in their lives & won't be anywhere near as worried about what happens if they lose their job 23.5 years from today. Few people know what the world will be like in 20 years, so perhaps it doesn't make sense to finance the largest purchase of their lives across 30 years. The rise of globalism, monopoly technology platforms, distributed software with zero marginal cost & artificial intelligence are likely to create massive & ongoing waves of structural unemployment. Greater life certainty: The recovery since the 2008 financial crisis has been uneven, with increasing income inequality & a greater sense of economic uncertainty than just about any economic recovery since the great recession which followed the 1929 stock market crash.If a person stretches their loan payments out to 30-years they build limited equity in their home in the early portion of their loan. Build home equity much faster: People typically move homes or refinance about every 5 to 7 years.Lower interest rates: While both loan types have similar interest rate profiles, the 15-year loan typically offers a slightly lower rate to the 30-year loan.Here are some of the advantages of a 15-year mortgage over a 30-year mortgage: However, for those who can afford the slightly higher payment associated with a 15-year mortgage are getting a better deal in almost every possible way. The big advantage of a 30-year home loan over a 15-year loan is a lower monthly payment. Advantages of a 15-Year Fixed-Rate Home Loan When interest rates rise consumers tend to shift more toward using adjustable-rate mortgages to purchase homes. When interest rates are low (as they were after the global recession was followed by many rounds of quantitative easing) home buyers have a strong preference for fixed-rate mortgages. Source: Freddie Mac's 2016 home buyer statistics, published on April 17, 2017. The 15-year fixed-rate mortgage is the second most popular home loan choice among Americans, with 6% of borrowers choosing a 15-year loan term. Of those people who finance a purchase, nearly 90% of them opt for a 30-year fixed rate loan. Across the United States 88% of home buyers finance their purchases with a mortgage.
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