Why Do People Choose 15-Year Mortgages?
A home purchase is more expensive than buying a car, paying for college, and most other things. As a result, people often spread out the repayment of a home purchase over 30 years. However, many people also choose 15 years. So why do many people choose 15-year mortgage loans? There are several great advantages of choosing a 15-year loan. Here is a guide to help you learn some of the top benefits.
Pay off the loan in half the time
The most obvious benefit of a 15-year mortgage is that you can pay it off in half the time. A 30-year loan requires making 360 monthly payments, whereas a 15-year loan requires only 180 monthly payments. If you're 25 years old, you'll pay off your loan by the time you're 40. However, if you choose a 30-year loan, you'll be 55 when you repay your loan. You might want to carefully think about this factor before choosing, as your choice impacts your life.
Get a lower interest rate and save money on interest
The second reason to choose a 15-year loan is to get a lower interest rate. Lenders naturally offer lower rates for shorter loans, so you can get a lower rate if you chose a 15-year loan. However, this isn't the only effect of interest on these two durations. Repaying a loan in 15 years lets you pay it off faster, which means you borrow money for a shorter period. The result is that you'll pay much less in interest over the course of your loan by choosing a 15-year loan. Lenders can show you the difference if you're interested in seeing it.
Build equity and financial freedom
The other factor to know about is equity and financial freedom. Your monthly mortgage payments build equity in your home, and equity is an investment. When you sell your house, you get to keep your equity, so paying for a home is like saving money. Would you rather pay off your house in 15 years or 30 years? If you repay it in 30 years, you'll have financial freedom in half the time.
Talk to a mortgage lender
Getting a mortgage takes time and work, but you can begin by talking to a lender that offers mortgage services. They can explain your options and help you choose the right loan program for your needs, credit, and financial situation. Learn more by contacting a service provider such as FNCB Bank today.