Picking between a 30 year fixed vs 15 year fixed

Recently a lot of borrowers have been asking my opinion on which product to select between Naples loan products 30 year fixed versus 15 year fixed.

A majority of home buyers select a 30 Year Mortgage payment without considering the 15 year option.
The first question I ask a client is what is your long term goal with the property?

With the 15 year option, you will receive a lower interest rate compared to the 30 year fixed. The 15 year option is becoming increasingly more popular now than recent years according to clients I speak with on a daily basis.
With the 15 year option, you will pay less in interest over the life of the loan and will build equity much faster. You will build equity but your payment is also considerably higher. The 30 year option the payment is much lower; in turn you pay more interest throughout the life of the loan. Let me give you an example: If you close on a $200,000 at 5%, you will pay around $175,000 in interest over the life of the loan compared to $75,000 in interest on a 15 year fixed at 4.5%. Picking between and 15 and 30 year fixed can be a difficult decision.

I always ask borrowers to consider if their cash reserves are sufficient to carry the loan if employment becomes an issue. You can always select the 30 year option and make additional payment towards the balance reduction. This protects you with a low payment but if times are good financially, you can always apply towards principal reduction.

It is impertive to weigh all the options and make a sound decision based upon your short, near and long term goals. Naples loan products can  be a very tough decision.

Take your time and evaluate what is BEST for your current financial situation. Please do not hesitate to contact us , I will guide you through the process.

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