While some people may tell you not to get a 15-year mortgage, there are actually a number of reasons to consider doing it. If you are looking into buying a house, it is highly recommended that you look into this option. A longer mortgage isn’t always a good thing as you will soon learn. Whether you are purchasing a house for the first time or you are considering refinancing, a 15-year mortgage comes with a lot of benefits that you should know about.
Shorter payback period
Some people consider a shorter payback period a bad thing because you don’t have as much time to pay off the loan, but it just means that you won’t have to pay as much interest. This means that you will ultimately be saving money in the long term, which is something that everyone wants. If you can afford the higher monthly payment, this is certainly an option that you should at least think about. The higher your monthly payment is, the faster you are going to pay off your mortgage. It is important that you make sure you can afford the increased payment each month before signing anything though.
Do you have a stable job?
One of the questions that you will want to ask yourself before deciding to get a 15-year mortgage is whether or not you have a truly stable job. If you can expect to stay gainfully employed in your current position for many more years, you might want to think about getting a 15-year mortgage. If you aren’t too sure whether or not you will still be making the amount you are now down the road, you will probably want to think twice.
If you are getting close to retirement
Those who are nearing retirement will want to take a good hard look at a 15-year mortgage, simply because you will be on a fixed income. Make sure that you don’t have much debt left to pay off when you retire so that you can take advantage of one of these mortgages. If you are interested in purchasing a home or even refinancing when you are in your forties or fifties, this mortgage option could be a particularly good idea.
When you need to save for other things
If there are a number of other things that you have to save up for, such as college or retirement, you will find that a 15-year mortgage could be the right call. The shorter payback period will allow you to pay off those other things sooner, which is definitely a good thing. You will still need to take the time to think about how much you can afford to spend on a mortgage payment each month, but it’s still something to keep in mind.
One of the best reasons to think about getting a 15-year mortgage is that doing so will help you build equity. If you want to refinance your home at some point, you will definitely be glad for all of the equity you have in your home. Those who have a 15-year mortgage build equity much faster. This will increase the opportunities you have when it comes to getting a loan against your mortgage if you ever need one for any reason.
You’ll be forced to make larger payments
It can be all too easy to make the minimum small payments when you have a 30-year mortgage, but when you have half the time to pay off your loan, you will be forced to make higher payments. Some people don’t view this as a good thing because they have to pay more on their home each month, but your house will be completely paid off sooner rather than much later.
The fact is that a 15-year mortgage can be a great option for a lot of people, but you will have to make sure that you can handle the increased monthly payment. Not everyone can afford such as an accelerated payback schedule, and you will definitely want to do the math before making a decision. Whether it is increased equity or saving money in the long term, there are a lot of benefits to getting a 15-year mortgage.