A 15 year home loan is a dream home loan for those who really can afford the highest monthly payments. Plus, they want to pay off their loan in half the usual time. It’s true that a 15-year mortgage can save the borrower thousands of dollars in interest. So, a reliable income or enough money should be there to cover savings and emergencies. It’s essential to understand what the mortgage refinance calculator speaks about a 15-years home loan?
What is a 15-Year Mortgage?
The loan is paid by the borrowers in 15 years as per the bank payment schedule. The mortgage has a fixed rate that includes the principal amount and interest rate until the borrower holds the loan. However, the taxes & insurance costs can change.
What did the Calculator Conclude About a 15-Year Mortgage?
➤Build Equity Faster
The home mortgage affordability calculator says a 15 year home loan makes the home equity faster. It’s because the borrower pays the principal balance fast. Moreover, the interest rates are not too high, so it’s a great relief for borrowers.
➤A Quick Way to Have Full Home Ownership
It feels great when we have the homeownership documents in our hands. Having a home is not only a basic need but no less than a passionate dream. People dream about their homes, such as what location they want, what kind of home they desire, etc. So, a 15-year mortgage is a quick way or a short path to get full homeownership.
➤Long-Term Savings
Another advantage that the calculator shows is the fewer years of risk. More years of loan means to pay an extra interest amount which a 15-year mortgage can save the borrowers. So, one can think of the long-term savings when deciding to take this loan.
Understand with an Example Below:
- One gets a 30 year home loan at 3.61%. That means the monthly payments of $1,024 and a total interest cost of $143,719.
- If one gets a 15-year fixed-rate mortgage at 3.13%. Then the monthly payments will be around $1,568 and a total interest cost of $57,226. Therefore, the savings of $86,493.
Drawbacks Mortgage Calculator Highlighted
➤Larger Monthly Payments
As many people want to know, when should I refinance my mortgage? Well, it’s essential to know if the mortgage has lowered down the monthly payments or is not at a present time period. In the case of a 15-year mortgage, the monthly payment is higher than a 30-year mortgage. Furthermore, one has to pay the taxes, insurance, so it’s only done by the ones who have a strong financial status.
➤Opportunity Cost
When paying off high monthly mortgage payments, one may be deprived of other investments such as money for home improvements, retirement plans, etc.
➤ Affordability Becomes Tighter
When paying off higher monthly payments, the borrowers’ normal desires are hard to meet. One needs to sacrifice for a temporary period their desires. In other words, any kind of affordable desire that was easy for the person to manage before seeking the loan. One needs to think wisely before taking a 15 year home loan.
Conclusion
A 15-year, fixed-rate mortgage is an excellent option but not for everyone. Perhaps, those who have an excellent financial position must use the mortgage or else think of other home loan refinance options.
