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One of the points to consider when putting together a mortgage is how long a repayment schedule should you choose; 15 year mortgage or 30 year mortgage? Both have their good and bad points depending on your situation. This article will examine the 15 year mortgage, why you may want to consider one, and what you can expect if you do decide to go with one of these mortgage loans.

Comparing a 15 Year to 30 Year Mortgage

A 15 year mortgage is exactly as its name implies. An opportunity to pay off your house in half the time as a more traditional 30 year mortgage. Sounds good right? Well it is, if you can afford it. According to mortgage trends, there must be a large contingent of homeowners that can, as the 15 year mortgage industry is booming. A 15 year mortgage will have a lower interest rate than a 30 year mortgage, but the monthly payments are higher simply because you have to ammortize the payments over a shorter period of time. If you can afford the higher payments though, you will build more equity in your house in less time.

Is a 15 Year Mortgage Right For Me?

A good guideline to go by is if you are planning on staying in your house for the long haul, and you can afford the higher monthly payments, it makes sense to go with a 15 year mortgage to build equity and pay off the house sooner. If however, you are not planning on staying in your house for a long time, a 30 year mortgage will keep your monthly payments down, allowing you to put money into other interest generating vehicles.

If at all possible, try to get a 15 year fixed loan. Try to steer clear of an adjustable rate mortgage if you can. You don't want to get caught having to quickly refinance at a much higher rate if rates happen to be going up when you have to refinance.

To summarize, a 15 year mortgage is good for you if: You want lower interest rates, saving money over the life of the loan. You can afford a higher monthly payment than a 30 year mortgage. You are planning to stay in your house for a long time. You want to pay off your house quickly.

A 15 year mortgage may not be a good idea if: You don't mind a slightly higher interest rate because... You want lower monthly payments. You are not planning on staying in your house for a long time. You simply can't afford the higher payments.

15 year mortgages are a great way to save interest money over the life of a loan. But, don't put yourself into a position where you have no cushion in case an unforseen circumstance comes up that requires extra funds.

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