Should You Choose a 15-Year or 30-Year Mortgage?

Buying a home is one of the most expensive things you will ever do in your lifetime.

That’s why it is important to consider your options when applying for a mortgage. While there are a multitude of options available, people seem to pick between the two most famous choices: a 15-year and a 30-year mortgage. CORE Finance Group broke down these popular options to help you understand the difference between them.

You can go for a more relaxed payment term and pay off your house in a span of three decades, or you can fast-track things a bit and finish your mortgage in just 15 years. There are multiple factors you can look at to know which mortgage suits you best. If you need some insights on things you need to consider before deciding on which mortgage to apply for, we’ve laid out a few pointers for you!

Choose a 15-year mortgage if you want…

Lower Interest Rates

Banks see 15-year mortgages as less risky compared to 30-year loan terms because things are more unpredictable in the duration of a longer mortgage term. That’s why 15-year loans typically come with a quarter-point to a whole point lower interest rate than 30-year loans. You may think that’s insignificant, but it adds up over time. Remember that we’re talking about decades of mortgage payments here.

Choosing a 15-year mortgage can make your overall loan much cheaper than the usual 30-year payment term. Yes, your monthly payments will be higher but you are going to save thousands if not hundreds of thousands of dollars in loan payments by finishing off your mortgage early. It could very well make a few years of tighter finances more worthwhile.

Forced Savings

Even though you are not putting your money towards typical investments such as the stock market or investment accounts, you are still investing your money in your property. Historically, real estate tends to appreciate in value. Your savings are then placed in building the equity of your home. Your fully paid property is still going to be one of your major assets later on in life. When it comes to it, you know you’ll have a wealth of equity to tap into for major expenses. Having a large amount of equity can even help you apply for a second mortgage.

Peace of Mind

Homeownership is a goal for many, and opting for a 15-year payment term can make it happen in a much shorter period of time. Obviously, your home would be yours faster than choosing to pay for it in three long decades. Not only do you stop monthly payments early, but you can sleep soundly at night knowing that you have a stable roof over your head. It will relieve you of one of the biggest financial responsibilities most Americans have.

You can also rechannel your funds to bigger things that you didn’t think were possible during the time you were burdened with such a heavy obligation. You free yourself from a major debt much sooner.

Choose a 30-year mortgage if you want…

Lower Monthly Payments

You are stretching your payments for a longer period of time, therefore significantly decreasing your monthly payments. This can help you stick with a better payment scheme because the burden won’t be too heavy. Simply put, you are sure that you are paying for something that you can afford. There are fewer risks of missing payments and incurring penalties.

Comfortable Cash Flow

Lower monthly payments would also leave you with more wiggle room for your finances. This comes in handy for emergency situations. You won’t feel too cash-strapped during unforeseen circumstances because there’s more money to go around.

If you don’t have the extra money to begin with, the much lower monthly payment can help you put your money towards building your emergency fund. Experts advise saving at least 3-6 months of your typical monthly expenses for emergency situations. The pandemic has emphasized the importance of having that extra money to tap into. It is always wise to have funds available to better help your family during times of distress.

Save Up for Retirement

Redirecting your finances for early retirement is also one of the benefits of a shorter payment term. The amount you’re otherwise paying for a 15-year mortgage can be channeled towards your retirement account. Financial advisors tell most people to go via this route when managing their finances. As you near paying your house in full, you’re also assured that you have a fund that can help you out later in life.

Flexibility to Pay Your Mortgage Faster

If you opt for a 30-year mortgage, you have more flexibility to increase your monthly payments. You can choose to pay half the amount every two weeks instead of monthly. That would constitute 13 months’ worth of payments instead of 12. Depending on the amount of the loan, you are looking at a significant number of years to chop off from your payment term.

Since your required minimum payment is lower, it would be easier to allocate funds toward your mortgage. You can comfortably rechannel extra bucks from a salary increase or investment returns.  Even without a refinance, you can actually pay off your mortgage early by adding on top of your regular monthly dues.

If you need help choosing the mortgage that is right for you, contact us. We would love to help.

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Target's New Holiday Collection is Giving Us Stocking Inspiration for the Holidays

Target just gave an exclusive sneak peek of its cheery holiday collection, from gold-rimmed barware to plaid furniture and even an adorable wood mixer for mini chefs.

But it’s the creative ways the brand chose to display its new stockings that got us most excited to start our decorating as soon as possible. Who says you need a mantel?

Even though a good amount of holiday decor typically centers around the shelf above a fireplace, fireplaces aren’t a given in many homes and apartments.  Thankfully, Target gave us these two brilliant hacks for hanging stockings, even if they’re not by the chimney with care. Here’s how to get the look this season in your home, no matter its architecture.

On A Bar Cart

All you need is a festive piece of extra ribbon to hang stockings from the ends of your bar cart. (Or should we say, champagne cart?) Roll it over by the tree to set a celebratory scene, and be sure to load it up with all the essentials: candy canes, sleigh bells, and glasses for clinking.

On A Dresser

A tall dresser or credenza makes a great stand-in for a fireplace mantel, especially when you live in a small space or with roommates. Here, stockings hang from the closed drawers and doors. No room for a tree either? A tiny artificial one can take over the spot above. It’s Christmas, condensed. 

For more holiday inspo, go to Domino.

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Thank you, Veterans.

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If you are wondering how current national and global situations might be impacting your property’s value, your neighborhood, or the Real Estate market in general, we are happy to provide more specific information.

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Cash Offers with West + Main and Accept.inc

What if you could send an agreement to buy your dream home tomorrow like you had the cold hard cash to pay for it today? Now everyone can compete and win with cash offers.

Today we’re proud to announce that West + Main Homes is working closely with Accept.inc to help make Cash Offers more available in Colorado. Instead of hoping the lender funds the deal at the closing, buyers get pre-approved and fully-underwritten before they start shopping,

Accept.inc acts like a rich aunt or uncle - extending the benefits of cash to secure the next home - then ensuring a mortgage is issued to the buyer after it closes.

Effective immediately, West + Main agents can help their clients negotiate like they have real cash. Remove the uncertainties and contingencies of traditional loans and compete with Cash Offers.

See this list of Frequently Asked Questions about getting funded with Accept.inc or ask your agent today!

About Accept.inc
We are a new kind of lender founded on the belief that anyone who can afford a home deserves an equal shot at winning - we believe that the best homes, school districts, and neighborhoods shouldn’t be reserved exclusively for buyers who have hundreds of thousands or millions of dollars in their bank accounts. NMLS# 1621427

About West + Main Homes
West + Main is an independently owned and operated boutique real estate concept specializing in residential properties in the greater Denver and Oklahoma City areas, established in February 2017. A long-overdue update on the traditional Real Estate brokerage, the team at West + Main Homes has created a culture that celebrates collaboration, thoughtful + intentional design, and excellent service.

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1. Get Cash-Approved

Accept.inc is a licensed mortgage lender with a simple online process to start shopping for homes with cash and get your mortgage later.

2. Win Your Dream Home

Write Cash Offers to level the playing field and experience the confidence of focusing on more important details - like which day to move in.

3. Finalize the Loan Later

After your West + Main agent helps finalize the details of closing, Accept.inc works to finalize the loan details without any of the pressure.

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Become a cash buyer. Win your next home!

What Could The Spring 2021 Housing Market Have in Store?

Many families were caught financially unprepared with the sudden onset of the pandemic. 

What seemed foreign and far away became domestic and close to home. The World Health Organization declared a global pandemic on March 11, and President Donald Trump announced a national emergency on March 13. Shelter-in-place directives proliferated across many communities and open houses canceled. The once-promising 2020 spring home-buying season, possibly the best since before the Great Recession, was slowed to a snail’s speed. The U.S. unemployment rate spiked from a 50-year low of 3.5% in February to an 80-year high of 14.7% in April.

The speed of the housing recovery from April’s trough has been impressive. The rebound was supported by accommodative fiscal and monetary policy. The sudden loss of income triggered by the pandemic was partly muted by an income tax refund for eligible taxpayers, enhanced unemployment insurance payments for laid-off workers, and small business loans to maintain employment through the Paycheck Protection Program. The Federal Reserve took immediate steps to cut short-term interest rates to near zero and accelerated their purchases of U.S. Treasury bonds and Mortgage Backed Securities to lower long-term yields.

The record low interest rates on fixed-rate mortgages fueled the largest refinance boom since 2012 and led a snapback in home sales. By July sales were above year-ago levels. The spring home-buying season had not been extinguished but only delayed to a summertime boom. But what does next spring’s housing market have in store?

There is a heightened amount of uncertainty on the market outlook given the difficulty of forecasting how the pandemic will evolve. A reignition of COVID-19 could prompt a national shelter-in-place order and a double-dip recession. At the other end of the gamut, new medical treatments and a vaccine could put the pandemic behind us and usher in a vibrant economic recovery. Something between these two extremes is the most likely outcome, with economic growth creating millions of jobs, but with the unemployment rate remaining elevated above 7%  for most or all of 2021.

Housing and mortgage outlook

Interest rates on fixed-rate mortgages reached record lows in early September, hitting below 3% at 2.86% for 30-year and 2.37% for 15-year. The median contract rate on home mortgage loans outstanding at mid-2020 was 4%, according to the CoreLogic TrueStandings database, indicating that a large number of home loans remained in-the-money to refinance. Approximately $5 trillion in home mortgage debt, or nearly 25 million home loans, had a contract rate of at least 4%. Not all of these loans will refinance, as some borrowers have insufficient home equity or income (many because of unemployment), or a too-low credit score to qualify for the lowest market rates.

Nonetheless, a mega refinance boom has generated the largest origination market in years.  The Mortgage Bankers Association has projected more than 6 million refinance originations and 10 million first-lien originations in 2020, the largest refinance market since 2012 and highest first-lien origination totals since at least 2006.

And interest rates are expected to continue to remain low throughout 2021, providing additional support for home sales and refinance. On June 10, the Federal Reserve released the latest views of the 17 officials who participate in the rate-setting meetings, which showed that all expect to hold the federal funds target at the current near-zero level through the end of 2021. With the Federal Reserve continuing to purchase MBS, interest rates on 30-year fixed-rate mortgages will likely remain near 3% throughout 2021…

Keep reading on HousingWire.

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