Why a 15-Year Mortgage Is Better

[A 15-year mortgage payment]( is not always that much more. A lot of folks think its unaffordable. Well, not always. Allow us to explain. Reason #1: The payment difference is not that much. Let’s review the difference between a 30-year term and 15-year term on a $200,000 mortgage. A 30-year mortgage on a $200,000 loan with 6% interest has a payment of $1,199 (not including property taxes and insurance). On that same house, the payment on a 15-year mortgage with a 3% interest rate would be $1,381. That’s only a $182 difference every month! Let's say you have a 4% interest rate. $1,479 is your payment. That's $280! That's not much more to save hundreds of thousands of dollars. If you do the math, that ends up being a savings of $183,060 for very little in payments! 30-year total payments = $431,640 15-year total payments = $248,580 Reason #2: You build equity in your home faster. The 15-year mortgage on the $200,000 loan has been paid down to about $81,000 and the balance on a 30-year mortgage is only down to $162,000. What does this mean? This means if you have a 30-year mortgage, you’ve paid almost $130,000, but you’ve only knocked $38,000 off the loan. Over the past 10 years, you’ve given the bank over $90,000! You’ve paid the bank more than double the amount you’ve built in equity. Because you’re making larger payments on a 15-year loan, you pay down the interest on that loan a lot faster, which means more of your payment goes to the principal balance every month. Reason #3: You end up paying off your house in half the time. If you get a 15-year mortgage, it’ll be paid off in 15 years. Why would anyone choose to be in debt for 30 years when they can get out in only 15 years? Keep a Long-Term Perspective If you think you’re getting a better deal with a 30-year loan because you saved a few hundo every month, then you are thinking short term. With a 30-year mortgage, you’re literally throwing away hundreds of thousands of dollars. Get the Right Mortgage There are a lot of options when choosing a lender. We have a portal where you can get a quote for a refinance AND apply for access to the grants database all in one. You get to compare and contrast all of the different options for a refinance and search for grants all with one action. [Take a look at our database and refinance programs here.]( [hfcm id="8"]