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The 15-year mortgage is best for those who are safe from a financial risk, says Rick Scott, an associate professorship in finances at Saint Leo University in Florida. "The majority of those who take out a 15-year mortgage have many economies or a high level of incomes, so they are not concerned about making this payment," he states.
Here is a look at some of the advantages and disadvantages that need to be considered before deciding on a 15-year mortgage, as well as some alternative options. The ones with a 15-year mortgage are paying less interest over the term of the loan and usually get a lower interest on it. According to Freddie Mac, between June 2012 and June 2013 the median interest of a 15-year mortgage was less than three per cent.
By August, this interest had risen to almost 3.5 per cent, up from almost 4.5 per cent for a 30-year mortgage. There is also the advantage that you can pay for your home earlier. Of course, the big disadvantage of a 15-year mortgage is that it blocks you into a higher month's pay.
A lot of connoisseurs like to buy as much home as they can afford, so they decide on a 30-year mortgage and extend the loan repayments. In order to obtain some of the advantages of a 15-year mortgage without the potentially cash flow problems associated with a higher cash flow per month, Rodriguez proposes to obtain a 30-year mortgage and pay for it as if it had a 15-year maturity.
The majority of home mortgage types, such as VA loan, have no early repayment fee, so you could repay the loan earlier and paying less interest over the term of the loan, but still have the freedom to reduce your payment in the event of a lost employment or money lap.
Disadvantages of this are that it takes more self control to additionally paying each and every monthly and does not get you the rates associated with a real 15-year mortgage.