When you are applying for a mortgage, there will be many questions you may ask yourself during the process. One of the questions you might ask yourself is do I want a 15 year or 30-year mortgage? If you are thinking about making your mortgage last for 15 years, there are some benefits for you paying your mortgage off sooner, rather than later.
One of the benefits you will have is you will save more money. A 15-year mortgage dramatically cuts your home-loan repayment time. The faster you pay off your loan, the less interest you would need to pay, which could save you tens of thousands of dollars over the lifetime of the mortgage. Not only that, the interest rate for a 15-year mortgage often better rates than a 30-year mortgage.
Another benefit of a 15-year mortgage is you build equity in your home faster than a 30-year mortgage. If you combine a shorter mortgage term with the rising house prices, you could have exponentially grown the amount of equity you have. This is a great benefit especially if you want to refinance down the road. The risk you present to your lender when you try to refinance will be smaller due to your smaller loan-to-value ratio with the 15-year mortgage compared to a 30-year mortgage.
Are you looking to retire in the next 10 to 20 years? If so, a 15-year mortgage will be great for you, especially if you want to downsize your home when you retire. When you choose a 15-year mortgage, it allows you to reduce the strain on your cash flow in retirement. You will also be paying off the loan much quicker than a 30-year loan and might even finish paying off the loan before you retire. So when you do retire, you won’t have to pull a lot out of your savings to cover living expenses since your home
Want to learn more about a 15-year mortgage? Then give us a call at (973) 577-7008.