What would you say if we told you that you could make 50% fewer mortgage payments, owe tens of thousands of dollars less in interest over the life of your mortgage? Oh, and on top of all this, pay it all back with a lower interest rate? If that all sounds great to you, then you’re probably going to want to start considering a 15-year mortgage over the standard 30 years.
A 15-year mortgage is more affordable than they’ve ever been, no matter where you are. If you don’t believe us about why they are a good choice, continue reading to learn more.
1. A 15-Year mortgage can save you more money.
When someone takes out a 15-year mortgage, it will cut your loan repayment time in half. The sooner you can repay that pesky loan, the less interest you’ll be paying. In the long term, this could save you tens of thousands of dollars in that time frame. Typically, a 15-year mortgage also offers a lower interest rate than the other alternatives.
2. A 15-year mortgage can help you build more equity.
As you repay your mortgage at this faster rate, you aren’t just saving cash, you’re also building equity much quicker too. Combine your shorter mortgage term with the constant increase in prices of a home, your home could become much more valuable by the time your mortgage is paid off.
This is helpful for a few different reasons, especially if you’re interested in refinancing the loan at a later date. As you’re paying the principal quicker on a 15-year mortgage, you’re building equity quicker, thus making it easier to refinance. When there is a smaller loan-to-value ratio, the lender will look at you much more favorably, and will be more likely to grant you the loan.
3. A 15-year mortgage can reduce the pressure on your overall budget when you retire.
By choosing a 15-year mortgage, planning for your retirement won’t be such a hard task. There are a lot of people who downsize before retirement, so when you choose a 15-year mortgage, you’ll have a better chance of the home being paid off well before you actually do retire.
4. A 15-year mortgage can help you practice discipline.
Instead of going with a 15-year mortgage, people would rather choose a 30-year mortgage and pay extra if and when they feel like it. While this may sound like a good idea, it really isn’t so simple. Sure you may start paying extra on your mortgage with the 30-year loan, but things might happen, and you may start paying less and less until you’re just paying the regular payment. If you want to have your home paid off in 15 years, stick to the plan, and you may as well just get that 15-year mortgage. This way you’re obligated to pay it off within that time frame.
Is a 15-year mortgage right for you?
These are excellent reasons why someone would be interested in a 15-year mortgage. However, it isn’t always the best option for some people. If you are someone who has a bit of extra money at the end of the month after your bills are paid, you might want to consider it. If you’re someone who has a good credit score, low debt-to-income ratio, and actually has enough income that would cover the 15-year mortgage payment, then you might be eligible for one.