Do you want to pay off your home quickly and build your home’s equity faster? If so, a 15-Year Fixed-Rate Mortgage may be the right fit for you.
Most home loans are 30-year mortgages but the 15-year option is quickly becoming a favorite of home buyers due to the benefits they can provide. 15-year fixed-rate mortgages allow home buyers to pay off home loans at a faster rate, resulting in finances being re-focused to retirement, traveling or other costs. Having a shorter loan term also helps quickly build the equity in your home, which may be important since so many people don’t expect to spend 30 years in one place.
Equity is the amount of the house that you own outright. This means that your home value can be higher with a 15 year mortgage because you are paying off more to the home in a shorter amount of time. You will be able to predict your monthly payments and quickly pay down your mortgage.
Payments & Interest
Paying off your home and building equity in a short amount of time (compared to a 30-year loan) may appear wonderful but it’s important to remember that you will be facing higher monthly payments. To those on a tighter budget, a 15-year loan may be a hindrance and a 30 year loan is recommended. With 30-year loans, home owners have lower payments and can pay more to the principal of the loan on a volunteer basis.
15-year mortgages require a high monthly payment amount and that cannot be lowered due to life situations which may cause financial burden. However, the home owners will not need to worry about the interest rate increasing. A fixed-rate mortgage means that buyer’s interest rates will remain the same throughout the life of the loan, ensuring that their payments remain the same month after month.
One benefit of higher monthly payments is lower interest costs for home owners. Because the home loan is held for a shorter amount of time (compared to a 30 year loan,) and due to the higher amount being paid to the loan, home owners accrue less interest and the loan is paid off in half the time.
If you feel a 15-Year Fixed-Rate Mortgage may be right for you or if you have questions please contact us.