What’s the difference if I choose a 15-year mortgage?
Posted January 11, 2020 in Real Estate Trends
Shorter mortgage terms tend to mean lower interest rates. With interest rates being low, a 15-year mortgage might be worth considering. Your mortgage advisor can create a comparison of the differences in payments.
Payments on a 15-year mortgage have a higher percentage of the payment amount being applied to the principal balance each month.
Depending on your goals for the home, it is important to realize that your payments will be just a little higher than if you had chosen a 30-year mortgage; however, you will own the home within 15 years when choosing to do so.
It is a consideration about cash flow typically that can determine whether a 15-year mortgage is right for you. If the home you choose to finance does not need any improvements, the 15-year loan might be a good fit.
If you simply have a goal to pay your home mortgage faster, then you always can accomplish that goal by financing with a 30-year mortgage and making additional payments toward principal. Your mortgage advisor can calculate how much additional principal would be required to pay each month for any time frame. And, if you enter into a scenario where the payment becomes a burden, you are not required to continue those voluntary extra payments.
The difference in choosing a 30-year mortgage loan and paying the additional principal versus choosing a 15-year loan is basically that the interest rate will be higher on the 30-year loan. Visit Peakmtg.com for answers to questions about how much of a payment you can afford. If you need help, you can get immediate help from anyone on the Peak team by calling or visiting online.
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