Choosing the right type of loan and the best overall option depends on a variety of factors specific to your situation.
Repayment lengths: 15-year versus 30-year mortgages
Deciding between a 15-year versus 30-year mortgage boils down to one key question: Do you need (or want) to free up cash flow now or in the future?
A 15-year mortgage typically offers a lower interest rate and quicker repayment period. However, it also comes with a monthly payment up to 1.5 times higher than a 30-year mortgage.
A 30-year mortgage typically offers a higher interest rate and longer repayment period, though your monthly payments will be significantly lower.
Consider the stability of your income and health of your savings before choosing what would work best for you.
Mortgage types: fixed versus adjustable rates
The differences in these mortgages are exactly what the names suggest. A fixed-rate mortgage offers an interest rate and monthly principal and interest payments that are set for the life of the loan, while an adjustable-rate mortgage may increase or decrease depending on interest rates and the adjustable rate period.
Because the monthly principal and interest payments on an adjustable-rate mortgage can change, this type of loan is usually better for homeowners who plan to move or refinance by the time the rate changes. Other monthly costs, such as taxes and insurance, may change on either type of mortgage.
Mortgage types: low down-payment options
Not ready to put 20% toward a down payment? There are several options that can help bridge that gap, depending on your situation:
- USDA loan – Up to 100% financing available for borrowers not exceeding the income limits who are looking to buy in certain areas
- VA loan – Loans for reservists, retired veterans and current members of the military, with a low down payment or no down payment required
- Home Now mortgage – Up to 97% financing available for homebuyers with low to moderate incomes
- First-Time Home Buyer – Up to 97% financing available for first-time homebuyers
Learn more about finding down payment assistance.
Mortgage types: construction-to-permanent
If you want to build your own home, you might consider a construction-to-permanent loan that bundles the financing of the lot and construction. Once construction is complete, the loan is modified to become a traditional mortgage.
Are you still unsure of where you stand on the 15-year versus 30-year mortgage debate or which type of mortgage you should choose? A mortgage loan professional can review your full financial picture and help you determine which mortgage is best for you.
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All BB&T mortgage professionals are registered on the Nationwide Mortgage Licensing System & Registry (NMLS), which promotes uniformity and transparency throughout the residential real estate industry. Search the NMLS Registry.
Consumer Handbook on Adjustable-Rate Mortgages coming soon.
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