If you are a first-time home buyer, you may be interested to know Utah mortgage companies are charging all-time low rates! That’s right, mortgage rates are lower now than they’ll ever be again in your lifetime.

Why? The real estate bubble burst in 2007, causing home values and mortgage rates to plummet. In 2011, we’re just now seeing what many experts believe to be the bottom of the housing market.

Many believe recovery is just beginning, and with the economic stimulus money being pumped into our nation’s economy, mortgage rates and home values may increase dramatically in the coming years.

Given all of this information, now is the best time ever to buy a house, if you can afford it. But, before you start browsing Utah mortgage lenders, you will have some decisions to make.

One of those decisions is whether to apply for a 15-year fixed mortgage or a 30-year fixed mortgage. Either choice can be a good one, depending on the circumstances of your situation.

Let’s take a look at both mortgage types a little more in-depth. Once you understand each mortgage type a little better, then you’ll know which one may work a little better in your situation.

15-Year Fixed Mortgages Offer Great Long-Term Savings

The primary reason you might choose a 15-year fixed mortgage is you can save a ton of money in the long run. Current mortgage rates are very low, and it is pretty reasonable to expect you could receive a rate of about 4.0%.

Let’s assume a fairly common mortgage of $200,000. At this rate, you’ll have the following payments for a 15-year fixed mortgage:

• $1,581 monthly mortgage payment
• $84,685 paid in interest over the life of the mortgage

For a 30-year fixed rate mortgage, you’ll pay the following:

• $1,073 monthly mortgage payment
• $186,511 in interest paid over the life of the mortgage

As you can see, if you decide to go with a 15-year fixed rate mortgage, you’ll save nearly $100,000 in interest over the life of the mortgage.

In terms of sheer math, the primary advantage of a 30-year fixed rate mortgage is lower monthly payments.

Beneath the Math Lie Several Important Decisions to Make

How much can you afford?

Besides the obvious mathematical calculations, you’ll have several other important decisions to make. How tight does a 15-year fixed rate mortgage make your finances? If you feel things are stretched a little too tight, you could opt for the lower monthly payments of a 30-year fixed rate mortgage.

If you want to make extra payments, you can usually do so whenever you’d like (check with the issuer of your Utah mortgage to make sure you won’t get slapped with any penalties first).

How large is your emergency fund?

If you opt for the higher 15-year fixed rate payments, you’ll want to make sure you have enough money in your emergency fund to cover at least 6 months’ worth of living expenses (a year’s worth of living expenses is better in this difficult economy).

If you don’t have that much money in your emergency fund, then it would be wiser to go with a 30-year fixed rate mortgage and wait until later to make increased payments.

How well do you tolerate risk?

In the event of job loss or other unanticipated economic hardship, having that higher mortgage payment that you may not be able to afford in the future can be a risky proposition.

By taking on lower mortgage payments you know you can pay off much more comfortably, you’ll be putting yourself in a more financially secure and mentally peaceful position.

Now That You Have the Information, What are You Going to Do?

These are some of the more important aspects of 15-year and 30-year fixed rate mortgages. Now that you know a little more, you have the ability to make a decision that works best for your situation. Which one do you feel most comfortable with?