Which one is best for you: 15-year or 30-year mortgage?
When it comes right down to it, choosing between a 15-year and a 30-year mortgage depends most on what you can comfortably afford for your monthly mortgage payment.
For those who are younger, a 30-year mortgage is often a good option because it allows you to have extra cash each month to save for bigger expenses down the road. Plus, it gives you a lot more flexibility because you have the option to make extra payments toward the principal. Borrowers can also look at refinancing their loan
to a shorter term with a better interest rate down the road.
However, if higher monthly payments are doable, and you’re interested in saving more money in the long run or making a decent-sized profit off the house, a 15-year mortgage is a great option.
15- vs. 30-year Mortgage Tax Savings
Some borrowers wonder if they can save more money in the long run on their tax deductions with one mortgage term over the other. With a 15-year mortgage, your interest rate would typically be lower, and the term would be shorter, so you’ll have less of an overall tax deduction than with a 30-year mortgage. However, even though the tax savings would be more with a 30-year mortgage, you’d still be saving thousands more overall in interest costs with a 15-year mortgage. Be sure to consult with your tax advisor on the changing requirements to ensure you get the maximum deductions on your home loan.
Qualifications for 15-year and 30-year Fixed-rate Mortgages
Both types of mortgages typically require borrowers to have a minimum credit score of 620 and a debt-to-income ratio of 45 percent of their gross monthly income. Some lenders offer more leeway on the debt-to-income ratio if the borrower has a higher credit score. You’ll likely also need to show a steady income and payment history. You can learn more about qualifying for a mortgage
For those buying a home the first time, you’ll need a down payment of at least 3 percent of the home’s value, and for those who are not first-time homebuyers, 5 percent of the home’s value. You can learn more about calculating your debt-to-income ratio, pulling your paperwork, getting the pre-approval, and more in our online Home Buying Center
SCCU is Here to Help!
As a credit union, we differ greatly from banks in one primary way—we exist to serve our member-owners, not make a profit for shareholders. As such, our mortgage rates are competitively low, and we don’t charge an application fee or pre-payment penalties. We also have fast pre-approval decisions and provide member service for the life of the loan. Plus, we offer special-rate discounts for those serving the front line in our communities. If you have any questions, you’re welcome to request a consultation with us
, or you can contact us
in the way that’s most convenient for you—via Live Chat, WhatsApp, over the phone, or a secure message in Online Banking.