Mortgage home loans are typically invested in with a 15 or 30 year repayment plan. The 15 year repayment plan is the shorter choice of the common types of mortgage terms. It requires the borrower to make substantial payments towards the loan across a shorter period of time. This can be very stressful if you are not financed to pay off the loan comfortably in this period of time. However, it may be a very convenient option as well as it allows the loan to be paid off in a quicker amount of time and for a lower amount of accumulated interest.
When shopping for a mortgage loan you will likely be comparing your choices between the 15 year and 30 year term mortgage home loans. Many people see the 30 year option as more appealing because the monthly payments will be much lower. However, there are many benefits to going the route of the 15 year term which should definitely be taken into consideration.
Lower Interest Rate with the 15 Year Home Mortgage Loan
The main feature of the 15 year mortgage home loan that makes it appealing is the low interest rates. This is what sets it apart from the 30 year term and makes it considerably superior to the 30 year term mortgage. The reason for the lower interest rate with the 15 year home mortgage loan is that the loan will be paid back in a shorter amount of time and defaulting the loan will be less likely as a result. The result of the more affordable interest rate will be a lower amount totally spent covering interest on the loan. This does result in larger monthly payments but less of each is going towards paying the interest on the loan.
The amount that may be saved with the lowered interest rate on the home mortgage loan may be very significant. For a $250,000 mortgage it is very plausible to save over $100,000 on the total amount you pay on the loan and interest payments over the term of the mortgage. This is an incredible amount of savings which may make it worth paying more towards the total of the loan each month.
What Else to Know About 15 Year Home Mortgage Loans
The lower interest rate of the home mortgage loan is definitely appealing. There are other features of this type of home mortgage financing that make it a quality choice as well. The option for refinancing is one major feature of this type of loan which should be noted. Refinancing is obtained after usually five to ten years have been paid for already. Refinancing for another 30 years elongates the debt tremendously so it is a very unappealing choice. Refinancing to 15 years would be enough time to pay off the loan comfortably but not stay in debt for way too long. years.
While the 15 year mortgage may be very financially beneficial there are still some things to consider when determining if this type of financing is right for you. It is very important that you are fully capable to make the monthly payments for the mortgage without any issues. There is not a lot of flexibility with the repayment plan for a 15 year home mortgage loan. The 30 year home mortgage loan alternative allows for flexibility of the repayment plan as you could make larger payments each month to work the balance of the loan down.
It is crucial to be sure that you can make at least the monthly payments every month if you decide to apply for the 15 year financing option. Alternatively, you could go the 30 year term route and get similar benefits if you make larger payments as often as possible. You may have to calculate your budget by factoring your current debt, income information, and any other financial variables. Determine if you can afford the monthly loan and interest payments for a 15 year home mortgage loan or not. If you can then the 15 year home mortgage loan is highly recommended as the lowered interest rates will allow you to save a considerable amount throughout the loan term.
You should not choose on a type of financing solely for the interest rate. There are many other factors that you will need to consider. Make sure you take everything into consideration when deciding which type of home mortgage loan to apply for. In closing, the low interest rates with the 15 year mortgage loan make it a very appealing choice so it should be a top consideration when looking to obtain a home mortgage.