Most lenders offer borrowers the choice of 30- and 15-year fixed-rate mortgages. These loan programs offer the same interest rate for the life of the loan and monthly payments (principal and interest) that remain unchanged. Here are 6 questions you should ask yourself before you commit to a 15-year mortgage:
1. Is a fixed-rate Mortgage Good For Me? A fixed-rate mortgage may be a good choice if you plan to stay in your home for a long time or if you feel more comfortable knowing your payment cannot change.
2. How Much Will I Save on My Interest Rate? It is a fact that 15 year mortgages will provide you with a lower interest rate and overall lower interest payment. However, there is a trade off, be prepared for a larger monthly payment.
3. Should I Do A 30-Year Mortgage and Make Extra Payments? A 15-year mortgage locks you into a set payment. With a 30-year mortgage you can make extra payments which will decrease the number of years of mortgage payments, but you need self discipline to actually make the payments. You really have to look yourself in the mirror to answer this question.
4. What Is the Benefit of More Equity Sooner? The benefit of home equity is that it provides a ready source to borrow against. Often it makes sense to borrow against yourself (via your home equity).
5. How Long Do I Want To Have A Mortgage? Whether you are young or mature, you may want to eliminate this obligation sooner. You may, for example, want to time at the end of your mortgage to enjoy your retirement. Consider the benefits of earlier relief from this commitment, but don’t forget to consider the income tax implications.
6. Should I Use My Home As A Primary Investment? By obliging in a 15-year mortgage you are investing in real estate, perhaps leaving less for other investments. Ask yourself, “How diversified do I want my portfolio to be” before making this financial commitment.
The 15-year fixed mortgage is fully amortized over a 15-year period and features consistent monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate — and you’ll own your home twice as fast and pay less interest than with a 30-year mortgage. But with a 15-year loan, you commit to a higher monthly payment. For more information about loan options, contact our preferred lender Lizy Hoeffer, Senior Loan Officer at Prospect Mortgage.
Senior Loan Officer
Office Phone: 480-718-6222
Personal Phone: 480-593-4510