15 Year Mortgage Rates
If you are planning to buy a house or a
property on loan then you must have done some research and would
have a few options at hand. One such option is a 15-year fixed
mortgage.
It is a loan with very low interest rates which stays
the same for the whole duration of the loan. Why is it the best
time to apply for a 15 year fixed mortgage? First of all the
interest rates are down to their all-time lowest and
irrespective of the fluctuation in rates, you will have to pay
the interest at the same rate as at the time, you were granted a
loan. If you can afford a fixed deduction from your monthly
income and want a shorter term for a loan then you are eligible
for a 15 year mortgage. But beware that, to account for a
shorter term usually the monthly installment is higher compared
to a 30 year mortgage.
It has been observed that in recent times, many
individuals are turning to a 15 year mortgage so they can pay up
their loans at a faster rate. This is usually due to the fact that
they now have a change of mind and in these uncertain times want to
get over with any liabilities they might have, which could even mean
a substantial increase in their monthly payment. They are willing to
strain their budget because of a thought that, eventually it will
add up as an asset.
Another reason is the fact that people are
realizing and have noticed the drastic fall in interest rates which
has made it possible for them to take up a 15 year mortgage as
opposed to a 30 year mortgage. Now the difference is not very
significant in terms of monthly payment and when compared to the
total interest paid in a 30 year mortgage, 15 year mortgage seems a
better and wise option.
Usually the individuals who choose a 15 year
mortgage plan at a fixed rate are older and well established with
fewer debts than the younger individuals. They would have progressed
at their work place and comparatively would earn more than others.
And most importantly, they do not have the expenses which a younger
homeowner might typically have.
Before you actually opt for a 15 year fixed
rate mortgage, you should consider the following pros and cons.
Pros:
It has a predictable monthly payment
The pay time for the loan is half compared to a
30 year mortgage
The interest rates are usually lower than 30
year mortgage, translating to lesser interest
Once the rates are locked you don’t need to
worry about any fluctuations and can easily manage your monthly
payments.
Cons:
Monthly payments can be quite higher than the
30 year mortgage loan.
Higher monthly payment makes it difficult to
qualify
Tax deduction benefit on a 15 year fixed
mortgage is less than a 30 year fixed mortgage.
If you are worried about loss of income in
future or do not meet these requirements then you might be better
off with a 30 year mortgage, where you can make extra payments
whenever the opportunity arises to pay off the loan faster.
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