Fixed vs. Adjustable Mortgage
A fixed rate mortgage is one that will have the same rate for the life of the loan or until you refinance and then you could have a new rate for the life of that loan. Where an adjustable rate mortgage may have a rate for 5, 7 or 10 years, and then can adjust according to a benchmark set by the market. But a cap on that rate is common.
If you want a payment that won't change on your monthly principal & interest, then the fixed-rate is probably the option for you. But if you want something on the cheaper side, and if you think you won't be staying in the property for very long, then the adjustable rate may be your choice.
15 Year vs. 30 Year Mortgage
As you probably have guesses, a 15/30 year mortgage is the length of time you have to pay for that loan. A 30 year mortgage will give you a smaller monthly payment compared to a 15 year one, but if you are wanting to pay off your home sooner, than the 15 year mortgage is the route to go.
On a 15 year mortgage, your "paid" interest will be less than a 30 year mortgage, and the rates can also be less than a 30 year mortgage. You will want to check with your tax adviser, but generally the interest paid during the year can be tax deductible. So another tax break if you take a 30 year mortgage.
Please check with any of our wonderful Financing institutions in Brookings, Volga, Arlington or Estelline South Dakota for more details on what works best for you.
First Bank & Trust
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