Question

If you have or would like to purchase a home, discuss the kinds of financial information you should consider when deciding to purchase a home.

For example, the book talked about a 30-year Mortgage Loan. Why might you select this over a 10 or 15-year loan or vice versa? What are the advantages of each? What other types of things should a person consider when purchasing a home?

Answer 1

To decide whether to buy a 30 year mortgage loan over a 10 or 15 year loan is a choice an individual makes accroding to the advantages and disadvantages of each of them

A 10 or 15 year mortgage loan means lower interest rate but higher monthly payments and a 30 year mortgage loan means higher interest rates but lower monthly payments.

A 10-15 year mortgage loan will help build equity quicker as you pay off your loan faster and pay less interest over life of a loan whereas for a 30 year loan the equity builds up slowly over a longer time and you pay more interest over the life of a loan.

A 10 - 15 year loan means less extra cash each month whereas with a 30 year loan you can save for your retirement fund as well.

If a monthly cashflow is a concern and ifyou do not have a steady or fixed income source then a 30 year loan is a best option as it lets you save more and give out less money each month from your pocket.but if you can afford the monthly payment cycle with a shorter term loan then you can take the 10-15 year loan as rates are lower and you have to pay interest for a shorter time over your loan term.

We also consider few more factors when purchasing a home: We depend on the monthly income , affordability, budget, savings, insurance and taxes, maintenance, current valuation at todays rate, future value of the house