Mortgage FAQ: What Are the Upsides to Having a Loan with A Shorter Term
"WE WANT TO REFINANCE OUR 30-YEAR MORTGAGE AND WE’RE CONSIDERING A 15-YEAR LOAN. BESIDES BEING ABLE TO PAY IT OFF SOONER, IS THERE ANY OTHER UPSIDE TO HAVE A LOAN WITH A SHORTER TERM?"
Becoming mortgage-free sooner is one of the prime reasons many people choose to get a loan with a shorter term, but there are other tangible financial benefits to having such a mortgage.
First, with a shorter-term loan—such as the 15-year mortgage that you’re considering—you’ll save quite a bit of money in interest over the life of a loan. Even with today’s low interest rates, the total interest on a 30-year mortgage can add up to thousands of dollars over the 30-year period.
Second, the interest rate on a 15-year mortgage is typically lower than that of longer-term loans, which means you’ll save even more money in interest.
Third, you’ll be able to build home equity much faster with a 15-year mortgage. Since you’ll pay down more of your principal sooner with a shorter-term loan, your equity will rise much quicker than if you had a 30-year mortgage.
Keep in mind that a mortgage with a shorter term will have higher monthly payments, but if you can afford those payments, getting a 15-year loan can be a good choice.
As always, your ability to qualify for a particular mortgage will depend on a number of factors so make sure to consult with your mortgage professional.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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