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Whilst looking for a residential mortgage loan, the majority homebuyers simply concentrate their attention on the mortgage rate of interest. At mortgagesort.com they follow mortgage rates every day, making note of any movement in the mortgage rates, attempting to predict a trend and in what direction it appears like rates will move in the forthcoming weeks or months.
The mortgage rate paid by homebuyers is understandably a crucial element but it's just one factor that will determine your monthly mortgage payment.
Another crucial factor (that you are able to control) that will play a role in determining your mortgage payment is the length of the home mortgage loan (for instance 30 years versus 15 years).
Amortizing your home loan over thirty years is standard, but there are additional alternatives that will play a large part in your monthly payments likewise, like how rapidly you build up equity in your home.
If you amortize your home loan over fifteen years, for example, your mortgage payment will be higher but you'll establish equity more rapidly and also be able to locate a lower rate of interest. Assuming that you could lock in at an interest rate ½ point lower when going with a fifteen year note your monthly payments would be approximately 35% more, which sounds like a lot but your interest expense over the length of the loan will be about 60% less and could save you thousands of dollars in the long run.
In summary, a fifteen year mortgage loan will bring down the total interest you pay and speed up up the rate in which you build equity in your home, irrespective of the rate of interest (even though a lower rate will indeed be in reach when amortizing over 15 years versus a standard 30 year fixed rate mortgage). If your budget allows for you to finance your home purchase over fifteen years, it's something you should surely look at. In the long run it will save you thousands.
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