Deciding whether a 30-year mortgage in Sterling Heights, Michigan is the best option, or whether another type of loan makes more sense, can be confusing to say the least. When you work with Gem Home Loans, however, we’ll make it easy. We’ll take the time to listen to your specific situation, and then recommend the loan program that will work best. You’ll always be able to get in touch with us, and we’ll always be ready to answer any questions you may have.
Your mortgage payment is actually a combination of a lot of different payments. These include interest and principal, as well as private mortgage insurance, escrow and more. The amount you pay toward interest and principal will change as the years go by. At first, you’ll be paying more interest. Then, eventually you’ll be paying more toward the principal.
It can be really frustrating to see so much of your money going toward interest at first, rather than going toward building equity. But the amount of interest is based on the balance remaining on the loan. As that balance gets smaller, so will your interest payments.
When you get a 30-year mortgage, the interest is typically higher, so it will take longer for it to start to decline. But there are still a lot of advantages to going this route. In fact, it’s the most popular loan among homebuyers – by far.
You might be trying to decide between a 30-year and a 15-year mortgage. With a 15-year program, you’ll not only pay off the home a lot faster, you’ll also pay a lot less in interest. Potentially, you could save tens of thousands of dollars. The flip side is that you’ll be paying a much larger amount of money every month. If you can afford it, a 15-year mortgage can be a great option. But if you have any doubts whatsoever, you need to think long and hard before you make that kind of commitment.
One thing you might want to consider, even if you could afford a 15-year mortgage, is to stick with a 30-year program. In most instances, you can pay off a 30-year mortgage early without having to deal with any pre-payment penalties. That’s not necessarily the case with a 15-year mortgage. If you try to pay off a shorter-term mortgage ahead of schedule, that could result in substantial fees. That’s because lenders tend to lose money when people pay a 15-year mortgage early.
The most important reason to consider a 30-year mortgage, however, is flexibility. You might have the money now to pay a 15-year mortgage, but how sure are you that will remain the case? If you had a 30-year mortgage with no pre-payment penalties, you could pay the same amount that you would for a 15-year mortgage. If there were months where you might not be able to swing the higher payment, you could always go back to the original one.
None of us have a crystal ball, of course, so it can be hard to determine whether you’d be better off with a 30-year mortgage in Sterling Heights, Michigan, a 15-year mortgage, or something else. Let a Gem Home Loans professional help you make the best possible choice. Contact us online or call (248) 780-1030.