Homeowners that see their home as an investment may want to consider a 15-year fixed rate mortgage since this type of mortgage can cost less over the life of a mortgage loan. Longer mortgages, like the 30-year fixed rate mortgage, bring a low interest rate, but over the lifespan of the mortgage, when interest is factored in, it can cost much more.
While the monthly payment on a 15-year fixed rate mortgage is higher than that of the 30-year fixed rate mortgage, many homeowners are choosing the 15-year option since there is both a low interest rate and the homeowner pays less over the lifetime of the mortgage.
If you view your home as an investment, the typical 30-year fixed mortgage may not pay off. On an average, with a $100,000 home loan, after 30 years, the homeowner will have paid almost double the home’s amount. While many people tend to overlook this fact, it’s unlikely you will get double the original amount on your home when you sell.
However, before choosing the 15-year fixed rate option, be sure you do your homework on the costs. Again, the higher monthly payment associated with the 15-year fixed mortgage may not be a problem for some homeowners, you still will want to be sure you are on the financial grounds to afford a home in this instance.