Choosing the Term of Your Mortgage Loan
Most mortgage lenders offer programs of 15 or 30 year mortgages, however mortgage programs can range anywhere from 10 to 30 years. Most of the advertisements you see will be for either 15 or 30 year fixed rate mortgages. The main difference between mortgage programs with different terms is the interest rate and monthly payment.
Many people wonder why their payments will be larger with a 15-year fixed rate mortgage if they have a lower interest rate than with a 30-year fixed rate mortgage. And the answer is quite simple; the amount of time you have to pay back your debt has been cut in half. The increase in monthly payment is usually what deters people from choosing a mortgage with a shorter term. However, if you do choose a shorter term mortgage program you are building equity in your home much faster.
While a 30-year fixed rate mortgage may be the more affordable option to you on a monthly basis, it may be to your benefit to choose a shorter term mortgage if you can. Paying interest for 15 years as opposed to 30 years will save you a lot of money. For instance, if you are taking out a $300,000 loan at 4.25%, a 30-year fixed rate mortgage will cost you $231,000 in interest, whereas a 15-year fixed will only cost approximately $76,000 in interest. That is over $150,000 in interest savings.
There are a lot of choices to make when choosing your mortgage program. A qualified mortgage banker with United Home Loans will be more than happy to work with you to find the best fit. Illinois Conventional Mortgage Rates
IL 30Yr conventional mortgage as of August 13, 2013 4.375%/4.416 APR
IL 15Yr conventional mortgage as of August 13, 2013 3.375%/3.445 APR
IL 5/1 ARM conventional mortgage as of August 13, 2013 3.375%/2.950 APR
IL 7/1 ARM conventional mortgage as of August 13, 2013 3.750%/3.207 APR
Please click this link
for APR assumptions and more IL mortgage rates