Many homeowners that want to be rid of mortgage debt often turn to a 15 year fixed-rate mortgage in the hopes of getting out of debt in a shorter amount of time. Obviously, a 15 year fixed-rate mortgage is going to be a shorter timeframe for repaying your mortgage debt, but is this type of mortgage optimal or the best option for homeowners?
One of the benefits of a 15 year fixed-rate mortgage comes in the form of the interest rate. Interest rates on 15 year fixed-rate mortgages typically are lower then, for instance, a 30 year fixed-rate mortgage or some adjustable-rate mortgages as well.
This low interest rate can be beneficial in that a homeowner will be paying less over the life of their mortgage, when it comes to interest, and may save money over the long run. When compared to a 30 year fixed-rate mortgage, homeowners typically save a substantial amount more if they have a 15 year fixed-rate mortgage for the shorter timeframe during which they repay and the interest rate is much lower as well.
However, a 15 year fixed-rate mortgage often comes with a higher monthly mortgage payment, as there is a shorter timeframe for the mortgage to be paid off. Anyone who can afford this higher monthly payment may stand to save on the total cost of their home after everything is repaid, principal and interest combined, but it may not be affordable for everyone.
Any homeowner who may want to get a 15 year fixed-rate mortgage or refinance for a 15 year fixed-rate needs to look at their financial situation and see if their income is stable and high enough so that they can afford a higher monthly mortgage payment.