There are HUGE advantages of the 15 year fixed today that many people in Anderson and in the Upstate of South Carolina overlook. Most people know that the rates are better for a 15 year fixed versus the 30 year fixed, but there is also advantages of faster equity building, less total interest paid over the life of the loan, a much more realistic time frame for paying off your home, free and clear. Plus, if you are putting less than 20% down, the mortgage insurance premiums are much lower than the 30 year fixed. All these factors can mean the 15 year fixed loan is the best option. Let’s delve into the numbers…
Today’s 30 year Conventional loan rates are approximately 5.5% – 5.75% for excellent credit and 25%+ equity (APR=5.747% approx., $250K loan amount). That is certainly higher than last year by over 2.5%. So how does a home buyer fight back? Well, consider the 15 year fixed rate loan. The rates have stayed down in the 4.50% – 4.75% range this week (APR=4.795% approx., $250K loan). Quite a bit lower. This can keep your interest costs very low considering today’s financially challenging markets of Anderson and the Upstate of South Carolina. What are the positives 15 year fixed rate other than a lower rate?
The big positives of a 15 year fixed rate versus a 30 year fixed rate are very financially beneficial. First, a 30 year fixed mortgage won’t be paid off until 2052 if you make minimum payments. That is a long time. A 15 year fixed rate would be paid off in the year 2037 (but the balance will get so low by 2035 and 2036, you may be able to make a lump sum payment to pay off the mortgage in FULL EARLY). Also, this early payoff can save you literally OVER a $100,000. In total PAYMENTS. For example, for a $420,000 home purchased and $250,000. financed, the 30 year fixed base payment is $1,419.47, or TOTAL PAYMENTS over 30 years of just over $511,000. (360 x $1,419.47 = $511,009.20). The 15 year fixed for $250,000. loan for a 4.5% rate is $1,912.48 per month (not even $500. higher payment to cut your loan term in HALF). The TOTAL PAYMENTS over 15 years of just over $344,246. (180 x $1,912.48 = $344,246.40). That means the 15 year fixed will save OVER $166,000. over the life of both loans, assuming minimum mortgage payments are made. PLUS, you pay off your mortgage FREE and CLEAR 15 years early! Very nice advantage.
Bottom line, if your budget can allow it, in Anderson and in the Upstate of South Carolina, the 15 year fixed is a great way to save THOUSANDS and THOUSANDS of dollars towards retirement, WITHOUT the risk of the volatile stock market of today. Think about it; the 15 year fixed may work for you!
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