Ask Dale: Understanding the Benefits of a 15-Year Mortgage
Jun 4, 2024 4:00 AM
Ask Dale: Understanding the Benefits of a 15-Year Mortgage
Today's question comes from Brent, who asks: "I heard you can get a lower interest rate with a 15-year mortgage. If so, how much lower? And is that the only advantage?"
Benefits of a 15-Year Mortgage
A 15-year mortgage typically offers a lower interest rate compared to a 30-year mortgage. This can save you a significant amount of money in interest over the life of the loan. Additionally, choosing a 15-year mortgage means you'll pay off your home faster, building equity more quickly.
Considerations and Alternatives
However, it's important to note that a 15-year mortgage comes with higher monthly payments. This could become a financial strain if you encounter unexpected expenses or changes in your income.
As Arnold Martin from TrustDALE-certified Absolute Mortgage Lending suggests, one alternative is to opt for a 30-year or 20-year mortgage and make extra payments as if it were a 15-year mortgage. This approach allows you to benefit from lower interest rates and faster payoff without being locked into the higher monthly payment of a 15-year mortgage.
"The answer to that scenario is a 30-year mortgage or a 20-year mortgage, and then pay extra monthly as if it was a 15-year mortgage. It’s like a 15-year mortgage pay down, but you’re not locked into that high payment, just in case anything happens to your finances."
Get Expert Advice
For personalized advice and to explore your lending and down payment options, contact Arnold Martin at TrustDALE.com. He can help you determine the best plan that works for your financial situation.
Understanding your mortgage options can help you make a more informed decision that aligns with your financial goals and provides flexibility for the future.
