The 15 Year Mortgage

With the recent drop in interest rates (and the over-all trend in property values), the 10 and 15 year mortgage has become much more desirable. Lately, the 15 year mortgage money is under 4% and allows homeowners to re-finance to a phenomenal rate and get back to building equity in their homes. In some cases the payment may not go up, or up that much, when coming out of a 30 year note. The interest savings over the life of the loan are staggering and make the decision very easy if the payment can fit into your budget and/or you qualify.

If I was a first time borrower or homebuyer, I would seriously look at a 15 year mortgage and stick to my guns and pay it off. Look at buying less of a house than you really want and pay it off in 15 years or less. Imagine being 25 years old and having a house free and clear by the age of 40 or less! In your younger professional years, your income will normally grow into the mortgage payment. If you get transferred, keep the house and rent it out. The instinct is always to buy more house than you need, but in today’s economic environment, less house is probably a more desirable default position.

I’m not going to clog the pages with numbers, rates and payments, etc. I can easily be reached for an in depth analysis on the subject and I’m more than happy to break down the numbers and delve into the details.