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Home Mortgages with a Bonus: 15-Year Loans Can Save Thousands
by Karen Lawson
CMR Columnist
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Today's home prices are challenging for many homebuyers, but if you have some financial flexibility, a fifteen-year mortgage might save you thousands of dollars in interest, and your mortgage will be paid off much sooner. If you can make higher monthly payments, a fifteen-year mortgage may be a great choice for you.
Mortgage Math: How Much Can I Save?
Many mortgage lenders and financial services websites offer mortgage calculators to help you determine how much you can afford to pay for a home and the estimated amount of the monthly payments. Homebuyers are often surprised to learn that with a typical 30-year fixed-rate home mortgage, they are paying a small amount of each payment toward the principal balance.
A shorter loan term can save thousands of dollars because the amount paid toward the principal balance increases faster, which means that your mortgage is paid off sooner. Do the math! Take advantage of a mortgage calculator to estimate how much you could save by comparing 15-year loans to 30-year loans.
Why You Should Consider a 15-Year Mortgage
Here are some features and benefits of a 15-year loan:
- A shorter term means you will pay off your mortgage faster
- Interest rates on 15-year loans are often lower than on 30-year loans
- The money you save on interest overall can be saved or spent as you wish
- If you're refinancing, a 15-year mortgage often requires no extension of your original loan term
Is a 15-year mortgage right for you? The financial freedom of paying off your mortgage in less time can be very appealing. Mortgage lending professionals and your financial advisor can help you find a mortgage loan that suits your needs, and there are many mortgage calculators available online to get started.
Source
Fannie Mae
About the Author
Karen Lawson has more than fifteen years of experience in the mortgage industry. She earned an MA degree in English from the University of Nevada.
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