Most people still view owning a home as one of life’s great achievements. The next great accomplishment regarding homeownership is to pay off the mortgage used to finance its purchase. Getting low mortgage rates on the loan is one way to pay down a home loan balance more rapidly. Getting a mortgage loan with a shorter loan term (say 15 years) can also get your home paid for sooner.
Compared to a typical 30 year loan, a 15 year mortgage loan is amortized for only 15 years (half of the time). Another advantage of getting a 15 year loan vs. a 30 year loan is that the mortgage interest rate charged will be lower. With fewer years to repay the loan, a borrower can expect the monthly payment to be higher with the 15 year mortgage. You can find tools on the Internet to help you determine the difference in monthly payments by typing ‘mortgage payment calculator’ in your favorite search engine. Once you determine the monthly difference between the two types of bank loans, you can decide if you can afford the higher payment. Consult with a mortgage professional if unsure – the last thing you want is to contact banks at a later date for mortgage loan modification assistance if economic problems arise down the road.