When you feel it is time to buy a home, you will face many new decisions revolving around your loan. For the uninitiated, these decisions can be overwhelming as well as confusing. Most Minnesota residents respond to these feelings of confusion in one of two ways. They freeze and decide not to buy a home, or they simply accept the first mortgage loan they encounter.
You may agree that both of the responses mentioned above are not very smart. Isn't it much better to learn about your loan options so that you can make an informed decision? One of the most common options for home buyers is the 30-year, fixed-rate mortgage. As with most financial matters, there are several upsides and downsides associated with this option for you to consider.
Here are the pros
- Mortgage payments are more affordable
- You may have an easy time qualifying
- Higher tax deductions
- Flexibility to pay more than your minimum payment
Here are the cons
- Your interest rates may be high
- The home's equity will grow slowly
- You will pay more total interest than you would with shorter loans
- You could end up spending more on property taxes
Most people do not consider working with a real estate attorney when buying a home, but there are many reasons to do so. Having a legal advocate helps you protect your interests when making real estate transactions. He or she can also advise you about which loan option will work best with your financial situation.
Regarding the title question: Is a 30-year fixed-rate mortgage a good idea or a bad idea? In the end, it depends on your needs and your finances, which is why you may benefit from assistance.