This is Why 15 Year Mortgages Are Uncommon
In the financial world, 20 and 30-year mortgages are the most common. A 15-year plan is optional, but it seems to be much less common. Although a shorter contract is obviously a faster, more efficient way to own your home, people are less inclined to take that road. Here are some reasons why people tend to avoid 15-year mortgages.
It's safer
When considering a mortgage plan, people are generally thinking about the safest way to protect their investments. If you
purchase a home under a lender, you will pay less monthly the longer you stretch out the contract. Monthly payments on a 15-year contract are larger than on a 30-year plan. People want to know that they have enough money to make the payments consistently and on time.
There are other options
Another consideration is that if they have more money at any time during the contract for their
new home, they can make additional payments on their loans. For example, if your mortgage payment is $950, you can still pay $1,200 if you can afford to, and the extra will credit to your balance. This makes a longer contract seem safer.
Why consider at 15-year mortgage
It's true that lengthier loans may require lower monthly payments and there other ways to pay down your loan. However, there are also huge benefits to taking advantage of a 15-year loan on your home. You will pay much less interest, and
your home will be paid off before you know it. While it's true that you can make additional payments, most people won't actually do that. If you have the money to make the larger house payment locked in, you will make that payment without further thought.
There are reasons why 15-year mortgages are a good idea and other reasons why this type of mortgage won't work for you. There is no right answer for everyone. Weigh your pros and cons along with your financial situation and decide what is best for you.
