30 year home loans used to be the best choice of most mortgage seekers, due to the total payments being spread over a longer period of time and with the interest rate set for the whole life of the loan.

The 30 year home loan is an industry standard, but is it the perfect choice for you? Because the total payments are spread over a longer period of time as well as the whole life of the loan this was the first choice of the majority home owners.

Therefore , the positive side for a 30 year home loan is substantially lower monthly payments. This attraction is somewhat lessened by the fact that you pay much more in interest. But, your interest is 100% tax deductible which does lower your after tax cost. It offers you some flexibility in that if your financial situation should change and you have more money you can pay it off in less than 30 years, all the while keeping the low monthly payments. Your payments are smaller, so in reality you can purchase a larger and more expensive home.

Following is an example of the interest difference between a 30 year home loan rate and one of the other rates. On a 30 year, 100,000 dollar loan using 7% interest rate your monthly payment of interest and principle would be $665.30 dollars. Over the ensuing 30 years you will have paid $139,511.04 in interest alone. Now with a 15 year home loan rate on the same amount you will pay $871.11 per month and over the following 15 years, you would pay $56,799 in interest. This would save you $82,712 dollars.

If you have the discipline to invest the savings from the lower monthly payments, it could be a good choice to agree to a 30 year mortgage. In particular, if you can find an investment that the long term payoff matches or exceeds what you would save in a 15 year mortgage. One other important factor to consider is how fast you would want to accumulate equity in your home or own it out right. Of course, 30 year home loans take much longer to acquire equity.

30 year home loan rates are certainly very popular and the vast majority of home buyers get 30-year mortgages because that is the longest home loan offered today. Many experts say that if they could acquire a 35- or 40-year loan, they probably would. There are quite a few other options to consider. Probably the biggest question you have to ask yourself when considering a home mortgage is what are your financial goals? What loan plan will help you reach that goal? It is clearly to your advantage to look into other loan options to meet your financial goals. It may surprise you that because of your personal situation there may be other mortgages plans more suitable for you.

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