Final answer:
Creditors must provide good faith estimates of mortgage loan costs within three days of receiving an application, as mandated by MDIA. Choosing between a 15-year and a 30-year mortgage involves considering factors like payment size, interest rates, and total interest paid over the loan's term.
Step-by-step explanation:
The Mortgage Disclosure Improvement Act (MDIA) stipulates that creditors are required to provide a good faith estimate of the costs associated with a mortgage loan within three business days after receiving a loan application. When considering the choice between a 15-year mortgage and a 30-year mortgage, it’s important to understand how this estimate, among other factors, informs the overall cost and affordability of the loan.
A 15-year mortgage typically offers lower interest rates and allows a borrower to build equity faster, but it comes with higher monthly payments. On the other hand, a 30-year mortgage lowers monthly payments, but the borrower will end up paying more in interest over the life of the loan, making it more expensive in the long run. An online calculator tool can be valuable for assessing the pros and cons of each mortgage term by comparing monthly payments, total interest paid, and other financial factors.