How to make the choice between short-term and long-term mortgage?
When we decide to take out a mortgage on a new house the first thing that we want to know about is the interest rate. Because the interest rate we will have to pay can make a significant difference amounting to thousands of dollars which will be paid for a new home.
But interest rates are not the only thing worth thinking about if we will speak about mortgages. Other factors must be taken to consideration too. One of them is the question about the period during which your mortgage will run. A wide selection of time spans is always available on this market. But the most often you can meet the extremes of 15 years on the short side and 30 years - on the long period.
As we know, even a little sum of money in savings can be doubled during several years ago and become a solid foundation. The $50.000 which were paid for a house with a mortgage can turn out to be hundreds thousand dollars if the mortgage have been running for 30 years.
If you arrange a mortgage of 15 or 20 yeas, you can decrease the growth in your total obligation. But in this case you must make an important decision, because you will have to pay a bigger sum of money every month. That`s why you should attentively think about your personal priorities and resources.
Some people can refuse from different bells and whistles in a near-term period to make monthly payments, and they will prefer a shorter mortgage. If you want to take a shorter mortgage and think you cope with this conditions, plese remember that a faster 15-year mortgage will raise your monthly obligations and can badly effect your solvency.