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Mortgage Choice - How to find the best home loan

Kristy Sheppard from Mortgage choice discusses about the importance of finding a home loan most suitable to your financial situation as well as ...

15- vs. 30-Year Mortgages: Which Is Best for Me?

Fifteen-year mortgages often have a lower interest rate, because the shorter loan term reduces the risk to lenders. This helps to lower the amount that you'll pay over the life of the loan. However, your monthly costs will be higher, because you're paying for the home in half the time.

The average 15-year mortgage interest rate today is 4.1%. That amounts to a higher monthly payment of $1,489. However, you'll only end up paying a total of $318,000 when all is said and done. That's a difference of $105,000.

How to decide

A 15-year mortgage can be the right decision if you're looking to minimize the overall cost of your mortgage. However, you have to ensure that you can afford the higher monthly payment. You don't want to put yourself in a position where you're struggling to cover your monthly costs. If you found yourself unable to make your payments, you could lose your home.

When you choose a 30-year mortgage, you're resigning yourself to paying a lot more over the course of the loan. But you have a lower monthly payment, and this can help you in two ways. First, it may allow you to purchase a more expensive home than you would be able to afford if you were using a 15-year mortgage. Second, it frees up your cash so you can put it toward other goals, like building up an emergency fund or saving for retirement. If you invest that money, it's possible that your investment returns will be greater than the interest rate you're paying on a 30-year mortgage, especially if your portfolio is stock-heavy.

9 Alternatives To A Reverse Mortgage: Other Ways to Meet Retirement Expenses

A reverse mortgage allows you to convert the equity in your home to cash that you can use for other purposes. Essentially, you're selling your home back to a lender in increments.

It's a popular method for seniors to supplement living expenses. Repayments don't begin until the owner permanently moves out of the home, passes away, or transfers ownership – as long as the home is maintained and property-related bills (taxes and insurance) are paid.

However, reverse mortgages have downsides, including equity-reducing fees and potential financial burdens to heirs – not to mention running out of equity before you run out of expenses. Consider these alternatives to a reverse mortgage before you commit.

1. Selling/Downsizing –  Instead of selling in increments, why not sell all at once? You'll probably receive more of your equity and can use some of those funds toward  alternate housing .

2. Selling to a Family Member –  If a family member is willing and financially capable, you can work out an arrangement to sell your home to that family member while they allow you to stay in the home. Put the terms in writing, or risk family arguments and confusion about obligations.