A 15-year fixed rate mortgage may be more beneficial for homeowners who are looking to eliminate their mortgage debt fast and get out of mortgage debt without spending a large sum of money. Many homeowners opt for a 30-year fixed rate mortgage because it often comes with a lower interest rate and monthly payment than most other mortgages.
However, the 15-year fixed rate mortgage comes with a lower interest rate than the 30-year mortgage and can save you money over the long run. The 30-year mortgage can sometimes cost a homeowner almost double the original loan amount, because interest accrues over 30 years, but obviously, with the 15-year fixed rate mortgage, this time period where interest accrues is much shorter. With a lower interest rate and a lower repayment timeframe the 15-year fixed rate mortgage typically costs less overall.
It also goes without saying that the shorter lifespan of this mortgage allows a homeowner to get out of debt in half the time than the common 30-year mortgage. However, some homeowners feel that the 15-year fixed rate mortgage is not beneficial because it comes with a higher monthly payment. Since the mortgage is shorter, a 15-year mortgage does have a higher repayment than the 30-year mortgage, but it comes down to the fact that a homeowner will pay less overall even though they’re paying more month-to-month.
While the 15-year fixed rate mortgage can be beneficial and help homeowners get out of mortgage debt in a timelier manner, homeowners should not jump into this mortgage without weighing the pros and cons. A homeowner must be certain that they are going to be able to meet this higher monthly mortgage payment for the 15-year fixed-rate mortgage, or they must be willing to sacrifice and save so that they can pay their mortgage and not run the risk of defaulting.
Some homeowners who may have trouble making their home payment or do not earn enough money to pay for the 15-year fixed rate mortgage as well as their other expenses may simply have to fall on the side of the 30-year fixed rate mortgage. Homeowners should look at their financial situation and see what mortgage is going to be best for them in terms of affordability before making a decision.