It is a tough decision to make a call about whether to put a 15-year or 30-year mortgage when buying a house. It is one of the most significant decisions in your life which will affect your future financial well-being. So before you choose a plan, you must weigh out the pros and cons of each option.
15-year mortgages are a simple concept where you pay off your house loans in monthly payments for a time span of 15 years. The same concept applies for 30-year mortgages.
Sammamish Mortgage is a company that has been providing its clients with mortgage services for the past 26 years. They allow their clients in states such as Washington, Idaho, Colorado, and Oregon to price their own loan, track rates and even provide an online mortgage process. They have a team of mortgage professionals who will guide you through the process of a 30 or 15 year mortgage loan, or any other services.
Reasons to opt for a 15-year mortgage
The following are some reasons why choosing a 15-year mortgage in comparison to a 30-year mortgage can be advantageous for you.
- High payments as a forced savings plan: The interest rates in a 15-year plan are relatively higher than for the 30-year plan. However, if you currently earn decent money and have no other loans then you have a loan for a shorter time, but even in the long run, you save more money in paying interest for 15 more years. You can save the rest of the money.
- You’ll be mortgage-free sooner: The sooner you can manage to pay off your mortgage, the sooner you’ll be debt-free and tension-free. It’s smarter to have paid off your mortgage before your time of retirement and when you still have a stable income.
- You have a stable job: If you’re a stable income earner, then you should opt for the 15-year mortgage. With your steady monthly salary, you will be able to pay the interests on time and pay off the mortgage in the shortest time.
- You can build equity quickly: The equity is how much of your home has been paid for and you actually own. A 15-year mortgage will help you build your equity faster and own your whole home in a shorter period of time than the 30-year mortgage.
- You are nearing requirement: It would not be wise for you to extend your mortgage up till your retirement age. In your retirement, you will have a fixed source of income, making it even more difficult for you to pay the loan. If the fixed source is not enough, then your retirement plans will not be pleasant.
- You can save for other things: The sooner you have to stop paying interest for the loan, the sooner you can start saving this money for any other purpose. You can save up for vacations, your family, or even deposit it in the bank to gain interest from it.
The above-mentioned reasons can make the 15-year mortgage a feasible option for some people. However, the decision of which plan to choose depends on your current financial situation and future plans.