Don’t Be Afraid of the 15-Year Mortgage
While a 30-year mortgage is the most popular loan in America, there are many reasons to choose a 15-year term. This is especially true if you want to pay less money for house’s overall value and become mortgage-free after 15 years, experts from Primary Residential Mortgage, Inc. reveal.
Cheaper in Many Forms
The main appeal of this loan is that you’ll save more money, as a 15-year loan costs less than to borrow money over a period of 30 years. Mortgage lenders note that you’ll pay off your loan faster and own the house outright 15 years earlier than the other loan term. Shorter loans, furthermore, are cheaper to fund and less risky, which means that they come with low interest rates.
A 15-year mortgage will also allow help you to have a type of forced savings, rather than investing your money in stocks. This can be beneficial if you plan to sell your home or downsize in the future. Being mortgage-free for a certain time will help you pay for necessary and leisure expenses like college tuition or a vacation abroad.
The Cost of Paying the Loan Faster
The major downside, however, is that comes with a higher monthly payment. This is because you are paying the loan faster. If you have a stable financial situation, this is never a problem. If you, on the other hand, is not comfortable with higher monthly payment, a longer term with a lower payment may be the right option.
There is also the issue qualifying for less home. As the monthly payments for a 15-years loan are higher, you’ll only qualify for a less loan value. This limits you to a more modest property than you would be able to purchase with a 30-year mortgage. It may not be a problem if you don’t mind buying a larger house.
Overall, a 15-year loan is more affordable over its lifetime, saving you a lot of money. The benefits of lower interest rates and owning the home faster outweigh the risk of a higher monthly payment. It is still best, however, to contact a reliable lender to know more about other options best suited for your situation.