When it comes to fixed-rate mortgages, the 15-year kind is the less popular one. For most people, it can be too hard to qualify. It entails higher monthly payments and comes with a more demanding cash reserve requirement.
But if you can afford it, though, any experienced mortgage lender in Portland, St. Louis, or Salt Lake City would advise you to consider it strongly. Its advantages are too good to pass up.
Here are the best benefits of 15-year, fixed-rate mortgages:
Owning Your Entire Home over a Short Period
If you don’t refinance at some point in the future, this type of mortgage creates a shorter path to home ownership. In just a decade and a half, you can enjoy an absolute sense of security, knowing your property is 100% yours. Although you might pay about 55% more than you would with a 30-year mortgage monthly, the peace of mind knowing that your home is completely paid off is priceless.
Building Equity Faster
While the amortization works the same for all fixed-rate home loans, a 15-year kind allows you to reduce your mortgage’s principal more rapidly. The faster you can cut it down, the more equity you can build your home quickly. If your property’s value appreciates a lot over time, you can tap into your accrued home equity to move up to a bigger property down the road.
Saving More on Interest
A 15-year, fixed-rate home loan can save you a ton on interest in two ways: a shorter amortization period and a lower mortgage rate. Having a home loan for just 180 months (instead of 360) can generate you interest savings of over $100,000. Since lenders view shorter-term mortgages less risky, they might be more willing to negotiate to lower your mortgage rate.
A 15-year, fixed-rate mortgage isn’t for everyone, but nobody can deny its advantages. If your goal is to be a legitimate homeowner faster and pay for less interest over time, then this home loan is for you.