Home,mortgage,for,years,Right, business, insurance Home mortgage for 30 years: Is It a Right Choice?
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Many people come to me for consultation on the choice of proper termsfor home mortgage loans. I used to explain to them all types of optionsavailable in the markets and also I used to caution them the advantagesand disadvantages of each of the options in the repayment terms for thehome loans. I know that the first choice for many home buyers is loanswith 30 year periods. It is absolutely right if you think in terms of installments ofrepayments. You have to pay only fewer amounts as the repayments spreadover a longer period. In fact this is the industry standard now. Butyou have to think about it little more carefully.30 year home loan, is it a right option for you?The main advantage for the 30 year home mortgage loans is the lowmonthly repayments. The other side of it is that the extra (in facthuge) amount you pay as interest. But if you assess properly, as theinterest payments are 100% tax deductible, you can see that you will bepaying the amount less. Also these long terms loans help you to availmore amount and hence you can afford bigger spacious homes as well. Let us go with real calculations and compare the total interest to bepaid for a long term 30 year home loan and 15 year loan. Assume thatyou have availed $ 100,000 at an interest rate of 7% per annum. Themonthly repayment you have to make for 30 year loan is $665.30 and for15 year loan this amount is $871.11. If you compare these two cases,you can see that you will be paying an extra amount of $56,799 for a 30year period. One good option is that investing the savings in the monthly repaymentsfor a 30 year loans so that you will be getting more amount than thatcan be saved by a 15 year loan. In fact if you can get a betterinterest rate investment option, you can fetch more savings throughthis process. Also the decision on the 30 year loan period depends onyour desire to accrue the equity. It will take longer period to build equity in a 30 year period loan. Typically the selection of the home mortgage loan period depends onyour financial condition, repayment capability and also the loan amountyou require. There is no doubt that 30 year home loan rates are themost attractive and most of the buyers opt for it. Presently 30 yearloan is the longest term loan available, and many experts suggest foran increase in this period, say to 35 or 40 years. It is your personal decision, mostly directed by your financial goals,either to go for 30 year loan or not. If you have good financialconditions, there are many other home loan period options in front ofyou to select. So make proper home work before deciding whether 30 yearhome loan is suitable for you or not.® Copyright 2008 RealEstateBloom. All rights reserved.
Home,mortgage,for,years,Right,