A 30-year mortgage loan is a loan that comes with a 30-year term and a fixed rate. The 30-year term here symbolises a term which a borrower can take to pay back a loan. In the course of a 30-year mortgage, the balance shrinks slowly and effectively.
Pros of a 30-year mortgage
There are plenty of pros to a 30-year mortgage, which is the prime reason behind the immense popularity of a 30-year mortgage.
Lower Monthly Payments: The payment will be lower when you choose a 30-year mortgage loan over another mortgage loan. This mortgage loan is best suited for the one who aspires to take a home loan. It is typically the longest home loan term that you can get. Extending the life of the mortgage loan will give you more time to pay the loan back.
Flexibility: Some lenders may ask you to make an extra payment on your mortgage principal each month. At times, when you have better savings in your kitty, you can make a higher payment in that month. When you can’t afford to pay extra, you can pay the minimum.
Helps you afford a more expensive home: When you choose a 30-year mortgage term, then you can afford a more expensive home.
Cons of a 30-year mortgage
Though there are so many advantages of choosing a 30-year mortgage loan, there are some drawbacks as well.
Higher Interest rate: Your lender will put a higher interest rate when you take a longer time to pay back your loan.
Takes longer to build equity: Your ownership in the home is known as equity. In case you opt for a 30-year mortgage loan, then it will take more time to build equity for you as compared to the shorter term.
More Interest Payments: If you opt for a 30-year mortgage loan, then you have to pay more interest.