15-Year Mortgage: Is It Right For You?

15-Year Mortgage: Is It Right For You?

15-Year Mortgage: Refinance?

With interest rates still hovering around record lows, now would seem like a better time than ever to refinance your home mortgage and snatch up favorable payment terms.  With such favorable rates you can definitely lock in a lower monthly payment and if you have equity, you can even take on a cash-out refinance and put some money in-hand for home repairs, vacation, or debt consolidation, all while locking in a low interest rate term.  With rates so low, this is becoming a popular time for borrowers with 30-year rates to switch over to a 15-year rate as the monthly payment may be affordable with today’s rates.  However, please note that 15-year refinances are not for everybody and you should really know the pros and cons before locking into a 15-year mortgage.

15-Year Mortgage: When To Consider?

The most obvious reason in determining if a 15-year Mortgage is right for you is if you have a steady career and a steady income that you can count on every month.  Also, know your numbers and ensure that the increase in $200-$500 per month is affordable without putting additional financial strain on your household.  There are normally a few groups of individuals who are in the right place for a 15-year mortgage and they are borrowers within 10 years or so of retirement who want to make sure their mortgage is paid off by retirement or shortly into retirement.  If you have recently come into a new career or new and steady revenue streams, now might be the right time to get into a 15-year mortgage.

15-Year Mortgage: Advantages

Even though you can probably figure out the benefits of the 15-Year Mortgage, let’s go over the advantages:

  1. 15-Year Mortgage is paid off sooner than your existing 30-year loans.
  2. Interest paid over the duration of the loan will be significantly lower.
  3. The ability to pay off the loan sooner lends to more money available in your budget.
  4. As long as you can afford the loan, there isn’t much risk here at all.

15-Year Mortgage: Disadvantages

If not planned out properly, there are definitely going to be some disadvantages to the 15-Year Mortgage refinance.

  1. The payments are significantly larger than your current 30-year payments.
  2. Limited flexibility if you should ever get into some financial strain as you are locked into a larger monthly payment.
  3. Take away from using excess money to invest in growing your wealth.  If you can invest at a higher % return, putting your money towards your home might now make sense.

15-Year Mortgage: In Closing

The best thing you can do with regards to determining if a 15-Year Mortgage is right for you is to first go over your entire financial situation.  You need to ensure you can handle the additional payment every month and should make sure there is a reason behind getting your home paid off sooner.  An alternative option to refinancing would be to stay with a 30-year mortgage, but make payments as if you had a 15-year term.  You can accomplish the same result but with keeping the financial flexibility to prevent a reduction in monthly income or unforeseen expenses that arise.
When in doubt make sure you find the right team that is going to get you the best possible rate and put you in the best possible situation.  I take pride in knowing my customer’s situations inside and out so I can be comfortable in what I propose to them.  If you are deciding between a 15 and 30 year mortgage, please feel free to call me at 888-900-1020, email me at contact@loanconsultants.org.

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