Are you thinking about refinancing your 30-year mortgage into a 15-year one? You should. A 15-year mortgage can make a lot of sense, especially since they’re now more affordable than ever. So, if you can afford the bigger monthly payments, do it. There are a lot of advantages that come with it.
Before we list the reasons why you should get a 15-year mortgage, it’s important to mention that this type of mortgage is not for everyone. The best candidate for a 15-year mortgage is someone who is able to handle the larger monthly payments. He or she has a strong income and no consumer debt.
But, even if you do meet these requirements, you still need to check the numbers twice before leaping into a 15-year mortgage. Things change over time, and your financial plans are no different. So don’t just rely on the money. There are also future expenses to think of, such as having children or buying a new car. All of these can really tighten your budget.
If your finances can handle it, here are the most important reasons to get a 15-year mortgage:
1. Save money
This is without a doubt the most important reason for anyone to refinance. Although a 15-year mortgage comes with larger monthly payments, you do save money. It’s all just math. The new mortgage shortens your home-loan repayment time. If you pay your loan faster, then you will also pay less interest. Getting a 15-year mortgage can save you tens of thousands of dollars over the life of your loan.
2. Enjoy your retirement
Don’t underestimate the benefits of a peaceful retirement. You worked hard your entire life and you went to enough stress. You deserve to enjoy your retirement. A 15-year mortgage can help you do just that. Pay off everything you owe fast, get rid of that financial stress, and you’ll be able to relax without a care in the world.
3. Build more equity in your home
This is another great advantage offered by 15-year mortgages. You don’t just repay your mortgage faster, you also build more equity in your home faster. With a little luck and the help of rising home prices, your amount of equity could grow exponentially. This will in turn make refinancing a lot easier and offer you more financial opportunities.
Here’s what you need to get a 15-year mortgage
Not having a mortgage can be a great plus for your budget. So if you’ve decided to get a 15-year mortgage, here’s what you need in order to be approved for one:
- A good credit score;
- A low debt-to-income ratio;
- Enough income to be able to pay the monthly payments.
Take a look at your budget. If you can afford it, there’s really no reason not to get a 15-year mortgage.