Thinking of buying a home? The time to buy may be now!

With all of the gloomy financial news we hear, there may be one reason to be jubilant.  A recent report by Freddie Mac states mortgage interest rates are at an all time low.  A 30-year fixed mortgage interest rate has fallen to 3.56%, whereas a 15-year fixed mortgage interest rate has fallen to 2.86% according to Freddie Mac.

The difference between the 15 or 30-year mortgage loan

Whether you are in the market for a 15 or 30-year fixed mortgage, these historic low interest rates can make a world of difference.  You can expect a monthly payment of $678 for a $150,000 home, financed with a 30-year mortgage, or a monthly payment of $1,026 for a 15-year mortgage.

Depending on your needs, each loan provides certain advantages.  A 30-year fixed mortgage allows for lower monthly payments, but will cost you higher interest payments in the long run.  For example, on the same $150,000 loan, you will pay approximately $94,000 in interest throughout the life of the loan, opposed to only around $35,000 for a 15-year fixed mortgage.  That is a huge cost savings!  But keep in mind, with a 15-year fixed mortgage, you will be responsible for higher monthly payments.

The best of both worlds

If you desire the cost savings a 15-year fixed mortgage provides, but a little unsure regarding the ability to make higher monthly payments, there may be an option for you.  Consider obtaining a 30-year fixed mortgage and paying additional principal payments.  This will, in turn, reduce your interest payments over time and also reduce the length of the mortgage.  You will have the flexibility to make additional principal payments when times are good but pay only the required amount when unexpected expenses may come your way.

No matter what you choose, take the time to speak with a loan officer and see what works best for you.

Remember, Your Choice, Your Future!

Kemberley Washington is a certified public accountant and former IRS agent.  She works as a business professor at Dillard University.  Follow her Twitter or subscribe to her blog at

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