Save a Fortune on 15-Year Loans

An old, traditional loan is recently proving itself popular once again. What loan is this? It’s the 15-year fixed-rate mortgage loan that allows home buyers to officially own their homes in 15-years, no strings attached! And although the payments are slightly higher than with 30-year loans, the home buyer will pay less than half of the overall interest of a 30-year mortgage.

The 15-year home mortgage attracts both first time home buyers and more experiences and financially secure home buyers. The loan allows first time buyers to pay off the loan before the children start college or before the kids plan weddings, while it also allows older home buyers to pay off the loan before retirement. The 15-year fixed-rate mortgage also gives many financing options using home equity. Although these two groups are especially benefited by the 15-year mortgage, all home buyers can appreciate this loan and find it a very rewarding option.

There are a number of advantages of the 15-year fixed-rate mortgage. First of all, you will own your home in the half the time that you would with a 30-year mortgage. You also save tremendously on interest with a longer-term loan. For example, on a loan of $75,000 at 9.5 percent, you would save over $95,000.

Since you are paying the loan off faster, as lenders want to expedite the loan payback process as much as possible, you will be receiving a lower interest from the mortgage company. Remember that the definition of fixed-rate means that your rate will not change, so even when the market rate increases, your interest will not rise. Also, 15-year mortgages fcan be insured by the Veterans Administration, the Federal Housing Administration and many private mortgage companies.

The disadvantages of a 15-year loan may be that the monthly payments are higher than with a 30-year loan by about 10 to 15 percent. Also, since you are paying less interest on the loan you will not be able to deduct as much from your taxes.

There is no argument that you can save considerably by obtaining a 15-year mortgage instead of a 30-year loan. What you need to do is consider your home owning goals and needs, and decide if the 15-year loan is practical and feasible for you.

Determine whether or not you can afford it, and whether it is important to own your home sooner rather than later. Weigh the pros and cons and make an educated decision based on your knowledge of the loans, and remember that there are also 10, 20 and even 25-year loans out there. Always remember, you have more than one option.