Your home is often your biggest investment, so in most cases, you’ll need a mortgage to help with this important purchase. When you think about mortgage loans, the 30-year variety usually comes to mind first. But there can be HUGE savings for you by considering a 15-year mortgage loan instead. It’s obvious that choosing a mortgage with a shorter term will result in having your home paid off twice as quickly. But did you know that 15-year mortgage refinance rates are generally less than longer term loans? This means the potential for big savings—not only are you paying a lower rate, but you’re also paying a bigger portion of your monthly mortgage payments to the loan’s principal balance.
A 15-year mortgage loan isn’t for everyone. You should expect that your monthly payment will likely increase because you’re paying the loan back over a shorter period. You should also keep in mind that the extra money you’re spending on your mortgage payments could earn a greater rate of return if it was invested elsewhere. You’ll also have less mortgage interest paid that you can potentially deduct on your taxes.
Here are some questions to ask yourself when considering a 15-year mortgage loan:
- Can you afford a higher monthly payment?
- Will spending more on your mortgage each month deplete your emergency savings?
- Could you invest the money elsewhere and earn a higher rate of return?
- Do you have outstanding credit card or other debt that you should pay down first?
- Would it make more sense to simply pay extra on your current mortgage?
After taking these things into consideration, if a 15-year mortgage loan makes sense for you, it has the potential to put a lot of money into your pocket!
Advantages of a 15 Year Mortgage Loan
If you’re looking at home loan refinancing and you decide that a 15-year mortgage loan is right for your situation and budget, there are many advantages to this strategy. It’s important to remember that 15-year refinance mortgage rates tend to be lower than 30-year mortgage rates. Not only will you have a lower interest rate, you will also be paying interest over a shorter period. In most cases, the monthly payments for your 15-year mortgage loan will be higher than for a 30-year loan, but the total interest paid over the life of your mortgage loan is substantially less. For an average homeowner, a 15-year mortgage loan can save you thousands in interest! You will also build equity more quickly, which is helpful in case you need to access that money for an emergency situation via a home equity loan or line of credit.
It’s also important to note that each home loan refinancing situation is different. Depending on your original loan and the 15-year refinance rates, it’s possible your monthly mortgage payment may actually be lower when you refinance with a shorter term. Each situation is different, so you’ll want to speak with an expert to know for sure.
How to Know You’re Getting the BEST Home Loan Refinancing
A mortgage loan is a big commitment, so if you’re considering home loan refinancing, you’ll want to be sure you’re using the best possible strategy for your situation. You don’t have to handle it yourself, there are experts available to guide you. If you don’t have a personal financial advisor, consider contacting a local real estate agent. Real estate companies have tons of experience with mortgages—they’ve seen it all. A local real estate agent can generally help with the expert advice you’re looking for to understand the best direction to take for your situation and budget.
For More Helpful Mortgage Loan Tips, Visit Our Blog!
Landmark Realty has experience with many types of homes and mortgages, and we want to share our knowledge with you. Visit our blog to read more about what we’ve learned over the years.
