Shopping for a mortgage? Let an experienced Alpine Bank mortgage lender help you determine if a 15-year or 30-year fixed mortgage is a better fit for you. The 15-year option has several attractive benefits, such as a lower interest rate, lower total interest expense, and a faster pay-off date. However, it also comes with some risks, including a higher minimum monthly payment that offers less flexibility in case of financial hardship.
On the other hand, the 30-year option provides a lower minimum monthly payment (depending on current financial circumstances), making it easier for many customers to qualify. The decision between the two options is not a right or wrong one, and it ultimately depends on each homeowner’s individual financial goals, budget, and timeline. Working with a local mortgage lender is essential as they can assist in providing relevant data and valuable perspectives to help make an informed decision.
Here are some data points to consider:
| Amortization | Loan Amount | Interest Rate | P&I Payment | Interest Paid | Paid Off |
| 15 years | $ 550,000.00 | 4.625% | $ 4,243.00 | $ 213,740.00 | Sep-37 |
| 30 years | $ 550,000.00 | 5.375% | $ 3,080.00 | $ 558,800.00 | Sep-52 |
The chart above shows the interest savings associated with the 15-year option. In this scenario, the customer would save $345,060 in interest expense by choosing the 15-year mortgage. However, the monthly payment would be $1,163 higher compared to the 30-year option. This increased financial obligation may make it worth considering the flexibility of a 30-year mortgage, especially in case of financial difficulties.
Another option to consider is blending the benefits of both the 15-year and 30-year mortgages. For example, a customer could choose the 30-year option with a lower minimum payment, but make larger payments to pay off the loan in 15 years.
What would that look like financially? Let’s explore via the chart below.
| Amortization | Loan Amount | Interest Rate | P&I Payment | Interest Paid | Paid Off |
| 15 years | $ 550,000.00 | 4.625% | $ 4,243.00 | $ 213,740.00 | Sep-37 |
| 30 years | $ 550,000.00 | 5.375% | $ 3,080.00 | $ 558,800.00 | Sep-52 |
| 30 years – pd in 15 years | $ 550,000.00 | 5.375% | $ 4,457.56 | $ 252,360.80 | Sep-37 |
In this scenario, the customer would save $306,439 in total interest paid over the life of the loan, while still having the flexibility of a 30-year mortgage.
The right mortgage structure can greatly impact your long-term financial health. That’s why it’s important to work with a qualified and trusted mortgage lender when making such a significant decision. Your local Alpine Bank mortgage lender is happy to discuss your needs and goals with you when you’re purchasing a home or seeking a refinance.
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