Your first instinct to finance a house purchase isn’t always right
by Philip van Doorn
Don’t take any aspect of home finance lightly, especially if you are a first-time buyer.
Many people in the U.S. assume when buying a home that a 30-year mortgage loan is their only real choice, but you can save a lot of money by going with a 15-year loan if you can afford it.
Spreading the payments over 30 years of course makes loan payments more affordable, but you will pay so much more if you go this route. And if you think you can’t swing a 15-year loan, you should still learn about all available options. The potential savings might be so large that it’s worth considering “buying less house” or reducing your expenses another way to get it done.
Indeed, the 30-year fixed-rate mortgage loan wasn’t always the standard in the U.S. “Before the Great Depression, home mortgages were shorter-term loans, 15-year at the longest,” according to Whitney Fite, president of Angel Oak Home Loans, a retail mortgage lender based in Atlanta.