What are the advantages of 15 and 30 year fixed rate loan?
15-year: The loan is usually made at a lower interest rate. The Equity is built faster because early payments pay more principal. 30-Year: In the first 23 years of the loan, more interest is paid off than principal, meaning larger tax deductions. As inflation and costs of living increase, mortgage payments become a smaller part of overall expenses. Payments are much lower than 15 year loans. Adjustable Rate Mortgages (ARM’s): Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits. ARM’s are linked to a specific financial index. They generally offer lower initial interest rates. Monthly payments can be lower which may allow borrower to qualify for a larger loan amount.
