There are lots of mortgage options out there, but many home buyers tend to lean toward the 30-year fixed mortgage rate. 

Did you know that with the 15-year fixed rate mortgage, you will pay less interest over the life of a loan as compared to a 30 year fixed rate mortgage? That’s because the buyer pays the interest calculated per year against the amount owed on the loan. Since the interest rate and monthly payments are fixed, part of the payment is going to the interest and the other part is going to the principal. 

Since the loan balance is higher in the beginning, the majority of your payment will be interest for the first few years of the loan.

With a 15-year loan, you may have a higher monthly payment but you will likely pay less over the life of the loan. The principal balance doesn’t decline as quickly on a 30-year-loan as it does for a 15-year fixed rate.

In short, while the larger monthly payment may be hard to swallow at first, the 15-year fixed loan could be a great choice if you want to own your home sooner and pay less in interest overall. Arc Home can help you explore the different options and break down all your costs so you can make the best financial decision to reach your goals. Give us a call today!