Explaining the Difference Between 15 and 30-Year Mortgages to Your Mortgage Clients

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May 25, 2023 | By RGR Marketing Blog

How to Highlight Pros and Cons of 15 and 30-Year Mortgages to Clients

Buyer’s regret is a real problem that some first time homeowners can experience. And their reasons for feeling regret can stem from a wide range of factors, from buying a home that’s too small to agreeing to a home loan that stresses their finances more than they anticipated. But when your success depends on the satisfaction of your clients, the last thing that a mortgage loan officer wants to have happen is for their client to suffer from buyer’s regret as a result of something he or she did or didn’t do.

One way that loan officers can wind up with an unhappy client is by not going over all the possible loan options available to them. A common scenario is when a loan officer goes on auto pilot and pushes a 30-year mortgage to a client instead of explaining the difference between 15- and 30-year mortgages.

If you’re just starting out as a mortgage broker, being able to adequately represent the variety of loan options is essential for ensuring you match your clients with the right loan product for them. This will help ensure that even should your client suffer from buyer’s regret, their negative feelings won’t be directed toward you.

So, here’s how to explain the difference between 15- and 30-year mortgages to your client.

The Primary Difference Between 15- and 30-Year Mortgages

The biggest difference between 15- and 30-year mortgages is the length of time it takes to pay them off. A mortgage with 15-year terms is paid back over 15 years, whereas a 30-year mortgage takes 30 years to pay off.

How Interest Rates are Affected With 15- and 30-Year Mortgages

Since a 15-year mortgage is paid off in half the time it takes for a 30-year mortgage, this type of loan is usually structured with a lower interest rate. As a result, the buyer will not only pay off their home quicker, but they will also save a lot of money on interest. That said, the fact that the buyer is paying off their home in 15 years instead of 30 will result in their mortgage payments being larger every month.

Pros and Cons of 15- and 30-Year Mortgages

Whether your client chooses a 15-year loan or a 30-year loan depends on many factors, including how much of a monthly payment they can afford. To help your client make the best decision for their needs, you should go over all the pros and cons that are associated with both types of loans.

15-Year Mortgages Pros and Cons

Pros
- Homebuyers pay off their loans quicker
- Interest rates are lower than on 30-year loans
- Paying off the home earlier frees up money for future needs like education and retirement
- Home equity accrues much more quickly
- Lower loan-to-value ratios mean that refinancing the loan may be easier
- A shorter mortgage makes selling without a loss more likely
Cons
- Larger monthly mortgage payments
- Loan approval may be for an amount that’s lower than what’s available with a 30-year loan
- Less money will be available for other needs, such as making home improvements or paying into a retirement fund

30-Year Mortgages Pros and Cons

Pros
- Lower monthly payments
- More money may be available for other financial obligations
- Can be paid off early by making extra payments (unless there are penalties attached)
- Homebuyers may be able to qualify for larger loan amounts than with shorter-term loans
Cons
- More interest will be paid by the buyer over the life of the loan
- Interest rates may still be high depending on the risk to lenders
- Home equity takes much longer to accumulate
- Lower payment amounts can increase the risk of overbuying
- It takes twice as long to pay the home off compared with a 15-year mortgage

Helping Your Client Choose The Best Loan for Their Needs

When helping your client choose between a 15-year mortgage or a 30-year mortgage, one of the most important things to do is to get them to consider which mortgage better satisfies their needs. Things that your client should be keeping in mind include their long-term financial goals, how long they intend to stay in the home, how much cash they have on hand for their down payment, and other expenses like private mortgage insurance (PMI) and home renovations.

Clients who can afford the higher monthly payments, and who are also interested in paying off their home quicker will be better served by a 15-year loan. They will reach financial freedom quicker and pay less in interest over the life of their loan.

But if your client wants to purchase a more expensive home that they are intending to live in for some time, and increase their financial flexibility with lower monthly payments, then a 30-year loan may be more preferable.

Connect with 15- and 30-Year Mortgage Prospects Ready to Convert

Whether you want to increase your 15-year loan closing rates or you are looking to connect with 30-year loan prospects who are close to making their home loan decisions, RGR Marketing can be the resource you need to reach a greater level of success. At RGR Marketing, we have more than 20 years of experience providing mortgage companies with hot mortgage leads that are well-informed and close to buying. We understand your business and we know how to help you succeed.

Our mortgage leads are verified and validated using our proven process, and your leads can even be tailored to your specific requirements. If you’re looking to partner with a lead vendor who makes your success a priority, then contact RGR Marketing today and discover the difference in quality our expansive market reach, proprietary lead-based matching technology, and top-tier customer service can bring to your mortgage leads.

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How to Highlight Pros and Cons of 15 and 30-Year Mortgages to Clients

The Primary Difference Between 15- and 30-Year Mortgages

How Interest Rates are Affected With 15- and 30-Year Mortgages

Pros and Cons of 15- and 30-Year Mortgages

15-Year Mortgages Pros and Cons

30-Year Mortgages Pros and Cons

Helping Your Client Choose The Best Loan for Their Needs

Connect with 15- and 30-Year Mortgage Prospects Ready to Convert

Start making more
money today!

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How to Highlight Pros and Cons of 15 and 30-Year Mortgages to Clients

The Primary Difference Between 15- and 30-Year Mortgages

How Interest Rates are Affected With 15- and 30-Year Mortgages

Pros and Cons of 15- and 30-Year Mortgages

15-Year Mortgages Pros and Cons

30-Year Mortgages Pros and Cons

Helping Your Client Choose The Best Loan for Their Needs

Connect with 15- and 30-Year Mortgage Prospects Ready to Convert

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