When financing a home, it’s estimated that 80 percent of all home buyers elect to take out 30-year fixed-rate home loans. It’s a popular option because of the low monthly payments.
Less popular are 15-year and 10-year fixed-rate home loans. The big downside with these shorter-term options are the higher monthly payments. With a 15-year home loan, for example, you can expect to have a monthly payment that’s 28 to 30 percent higher higher than with a 30-year home loan. And, you’re locked into paying that higher payment.
The main advantage of a shorter-term mortgage is the earlier payoff and substantial savings. You’ll pay your home off more quickly and pay significantly less in interest over the life of the loan.
In addition to fixed-rate mortgages, home buyers also have a variety of ARMs to consider. Today’s ARMs are often based on a 30-year repayment schedule with a period of five, seven or 10 years in which the loan’s interest rate remains fixed. After that set period, the rate adjusts. After the adjustment period begins, the loan’s mortgage rate — and the monthly payment — could go up or down.
At Primary Residential Mortgage, we are dedicated to helping our customers find the right loan — and loan term — that’s right for them.