There are lot of financing options to buy South Plainfield, New Jersey real estate, if you can meet the credit guidelines.
Most lender’s prefer to use 30-year mortgage loans. With a longer loan term, the lender can collect more money in interest over the life of the loan. For those who are credit-worthy, a 15-year mortgage term may be offered. So, what is the difference between the two? Here are a few guidelines:
Thirty-year mortgages are becoming the normal term for South Plainfield real estate loans. The payments are usually more affordable and lenders are quick to recommend them. Lenders are more likely to offer you a higher loan amount with a 30-year loan, but the trade off is usually a higher interest rate.
What Are The Benefits Of A 15-Year Mortgage?
Signing up for a 15-year mortgage can save you a lot of money in interest payments. True, your monthly payment will be higher than with a 30-year loan, but the impact on your long-term finances may be worth it.
After just 16 years, you can start investing the money that you're no longer spending on your mortgage into other New Jersey real estate properties or investment opportunities. You can build your investment portfolio with just the money you would’ve spent on your monthly mortgage payment.
What About Prepayments?
Even if you do decide to take out a 30-year loan, you can still have some of the same benefits of the fifteen-year loan. By making prepayments, you can take years off a 30-year loan and still have the freedom of making smaller monthly payments, if you need to. Before finalizing your decision, ask your lender if there are any penalties for making prepayments.
A 15-year mortgage is usually the better financial decision, because you can save thousands of dollars over the life of the loan. The interest on a loan may be halved by choosing a 15-year loan.
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Cathy Chaudemanche, Realtor Associate/Keller Williams Realty Metuchen, NJ
Servicing Home Buyers and Sellers in Middlesex County, NJ
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