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15 Year Mortgage Advantages - Information and Advice
"Pay off your mortgage loan in 15 years and
enjoy lower rates."
15 Year Mortgage: Mortgage Free In 15 Years!
Imagine paying your mortgage off in 15 years! Think of all the great things you
could do with that extra money. What would you do? If you could eliminate your mortgage in half the time,
then your options would be wide open. Consider using a 15 year mortgage to
achieve your dreams.
Let’s take a look at whether or
not the 15 year fixed rate mortgage, is right for you. Here are six points to
consider:
1. Lower Interest Rate
2. Huge Savings on Interest Paid
3. Mortgage Paid in 15 Years
4. Affordability
5. Expendable Income
6. The 15 Year Loan as an Investment
1. Lower Interest Rate:
The 15 year amortized fixed rate loan carries a lower interest rate.
The interest rate is usually about ½ % the rate of a 30 year term.
For example, as of today’s date, the average 30 year fixed is going for about
5.67%, while the average 15 year fixed is going for about 5.10%.
That’s a savings of .57%!
Click here to compare current rates on a
15
year mortgage
2. Huge savings on Interest Paid:
Do you want to save a ton of money? A 15 year fixed will accomplish this for
you.
Let’s look at a $300,000 loan. Over the course of 30 years, at 6% interest, you
will pay the bank $347,514 in interest. (Yes that’s right. You’re paying the
bank 115% of the loan value, over the course of 30 years).
However, with a 15 year fixed rate loan, at 5.5%, you will only pay $141,225 in
interest (Wholly smoke! That’s a savings of $206,289!).
What would YOU do with $206,289?
3. Mortgage Paid in 15 years:
Because the loan is amortized for 15 years, instead of 30 years, your commitment
to the bank is cut in half.
This is an enormous advantage. After 15 years, money normally applied to a house
payment can be applied to investments.
Or, you can begin considering alternative careers, retirement, or home
improvements.
Or you can just spend that extra money on fun stuff and goodies.
Any way you look at it, cutting your commitment down to 15 years affords you
many more options in life.
So we’ve established that a 15 year loan clearly has some amazing benefits. But,
is the 15 year loan right for you? Let’s take a look at some important
considerations:
4. Affordability:
Even though the 15 year fixed rate loan enjoys a ½% savings in interest, there
is still the question of affordability.
For example, a $300,000 mortgage, amortized over 30 years at 6%, equates to a
monthly house payment of $1798.
But the same loan amortized over 15 years at 5.5%, equates to a monthly house
payment of $2,451.
That’s an extra $653 per month, or a payment that’s 36% higher than a 30 year
fixed.
Can you afford the long-term commitment of a 15 year fixed rate loan?
5. Expendable Income
The 15 year fixed rate loan is an important consideration if you have extra
income and you are looking to apply it somewhere. Ask these important questions:
Are all your bills getting paid?
Do you have low debt?
Are you spending too much each month on luxuries?
Are you spending too little each month on productive investments and savings?
If money’s got you down, and things are tight, and if there are other financial
areas for you to explore first (such as paying off credit cards), then perhaps
the 15 year loan may not be right for you, at least not right now.
Start by completing a budget analysis, and figure out a plan to get you from
point A to point B.
6. The 15 Year Loan As An Investment:
This is really, the most important consideration. A 15 year fixed rate loan is
more of an investment then anything else.
The financial benefits of a 15 year fixed rate RIVALS the benefits of a 401k,
Roth IRA, and Mutual Fund performance.
You need to compare the money saved (in our example, that’s $206,289) to the
performance of your other investments in your portfolio. Remember to calculate
in the extra money you are paying for the 15 year loan (in our example, that’s
$653 per month), so that you can determine a net profit.
If you are exploring ways to build wealth, and apply your money in a productive
way, then you need to seriously sit down, and figure out how to get a 15 year
loan incorporated into your plan.
Remember, money saved, is money earned!
We’ve enjoyed providing this information to you, and we wish you the best of
luck in your pursuits. Remember to always seek out good advice from those you
trust, and never turn your back on your own common sense.
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Copyright 2004, by LoanResources.Net Tom Levine provides a solid, common sense
approach to solving problems and answering questions relating to consumer loan
products. His website seeks to provide free online resources for the consumer,
including rate-watch, tips and articles, financial communication, news, and
links to products and services. You can check out Tom's website here:
http://loanresources.net.
Related Pages
Applying For A
Mortgage - Tips on how to apply for a mortgage - What to look out for
when applying for your next home mortgage loan.
Biweekly Mortgage Reduction Program - Information and tips for
implementing a biweekly mortgage reduction program using a payment schedule -
Pay off your home loan ten years early.
Choosing A
Mortgage Lender - Facts to consider in choosing a mortgage lender -
Five steps to getting the best loan by leveraging online mortgage rates.
Advice - How to save
big when buying or selling a home - Sources for lowest mortgage quotes - Save
thousands by avoiding paying private mortgage insurance.
Comparing
Mortgage Terms - 15-year vs 30-year mortgage - Pick the right term
for your mortgage loan based on what works best for you - 15-year loans have
many advantages.
Home Loans In The News
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