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Why would anyone do a 15-year fixed mortgage?

Are the advantages or going that route? by galago820 from Millsboro, Delaware. 23 days ago Reply

William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,154 contributions

Well, the obvious answer is to pay off the mortgage in half the time.. But going a 15 year vs. a 30 would also get you a better interest rate.. Everyone is different, but there are folks who have a hard time saving money, so they use their home as their savings account.. when you compare a 15 vs. 30, from your very first payment, on a 30 year, about 25% of your P&I payment goes to principal.. the other 75% is interest.. but on a 15 year, about 50% goes to principal.. And with each passing payment, the principal portion of your payment increases while the interest portion decreases.. Fast forward 5 years, and on a 15 year, you would have paid your principal down to about 74% of your original loan amount, but a 30 year would only be about 8.5% of your original balance.. The down side with 15 vs 30 is the higher payment.. but again, if you have a hard time saving, and you make plenty of money,, then a 15 year loan is like forced savings.. obviously, there are many, many more things to consider.. so without looking at your complete loan profile, it's hard to advise whether or not this would be good for you, but in most cases,, it is a better way to go.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

22 days ago
Dave Skow (daveskow)
#16 ranked lender in Washington - 145 contributions

1)lower rate available as compared to a 30 yr fixed rate ...2) allows the debt to be paid off faster and thus save tons of interest expense over life of the loan

22 days ago
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