Anyone considering financing real estate these days should consider the length of the loan, typically the biggest comparison is between 30 year loans and 15 year loans.  Historically the majority of home buyers opt for a 30 year loan, but these days, with such low rates, a 15 year loan could make more sense than ever. A lot of investors within the DC area market are going with a 15 year since the rental market is so strong.

The most obvious benefit to a 15 year loan is that your home will be paid off in half the time of a 30 year loan.  Having a home completely paid for by the time retirement rolls around is a goal for many home owners.  This goal is much easier to attain with a 15 year loan.

A 30 year loan offers lower monthly payments, which means less pain on your wallet each month.  In addition, many home buyers buy a home without having the intention of staying there forever, so paying off the loan is not a priority where lower payments might be.

If you are refinancing your home in today’s market taking advantage of low rates and switching into a 15 year loan could be a smart move.  With a little more paid each month your home could be paid off in a much shorter time frame.  Typically a 15 year loan offers a lower rate than a 30 year loan as well.

So, what type of loan works for you?  Only you can answer that, but if you plan on staying in your home for a lifetime a 15 year loan with such exceptionally low rates (currently 3.25%) is certainly tempting.

If you have any questions, feel free to email or call me.

Click here to read “Mortgage Rates Finish 2011 Near Historic Lows” from Realty Times.

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