How do borrowers save with 15-year mortgages?
Posted on Wednesday, June 10, 2015 at 4:09:40 PM
All things considered, some mortgage types will help homeowners save more over the life of the loan than others, with 15-year mortgages often offering the best long-term savings.
Though mortgage rates are set to rise in the near future as the U.S. continues its economic recovery, they are still relatively low when compared with years past, which is why acting sooner, rather than later, is a good idea for people interested in buying a home. The savings that people can see by applying for mortgages before rates rise too much only get better when the loan is of the 15-year variety.
Residential lending typically consists of three popular mortgage types that vary by length. There are other home loans out there, but 15-, 20- and 30-year mortgages are among the most popular. Though the monthly payments for 15-year mortgages are more than the other types, the ength of these loans is relatively short and the interest rates and APRs are typically lower than those of other residential financing options.
The Mortgage Reports noted that a homeowner who files for a 15-year mortgage could end up saving 64 percent, when compared with what he or she would pay through the life of a 30-year fixed-rate mortgage. If month-to-month payments are affordable, than a 15-year mortgage can certainly offer homebuyers long-term substantial savings over other home loan types.