Whether you'e buying a new home or refinancing, experts says one major thing to consider right now is the time of the loan. It could save you tens of thousands.
"We've looked at both, and I think we're leaning toward the 15-year," said Ann Gladstone, who's shopping for a new home. "Now we have a 30-year. And if we have a 15-year, I think we could have even a lower payment with a 15-year."
Marc Elliot with Core Lending says the first 10 years of a 30-year loan is mostly interest anyway.
"A 15-year is going to pay off obviously a lot faster. On the average house in Houston, it's gonna save about $100,000 in payments," Elliot said.
And the monthly cost between a 15- and 30-year loan may not be as much as you think.
"Payment difference is about $400 a month," Elliot said.
Those numbers are based on current interest rates, and the average home sale in Houston being around $175,000.
Elliot says a 15-year rate on average goes between 2.75 and 3 percent right now.
"Thirty-year is generally three-quarters of a point higher. So that makes it about 3.5 to 3.75, depends on the day of course," Elliot said.
Another reason to consider a 15-year? If your credit isn't great, Elliot says conventional loans don't penalize you for lower credit scores as much on a 15-year versus a 30-year.
"If you're gonna sell a house five years down the road, you're be further in your loan, you'll have more equity," he said.
If you're looking to save even more, you may want to consider purchasing points to lower your interest rate. However, experts say it all depends on how long you plan on saying in the home to make that savings make sense.
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