What is the deal with a 15 year mortgage? Should I considerone when buying a Denver home? It certainly is a good question and one that wehear more and more now that rates for 15 year mortgages are so incredibly low.
The average for a 15 year mortgage is now down around the 3%level which is just plain crazy. In the past, lots of buyers shied away from 15year mortgages because if you are paying your home off twice as fast, obviouslyyour monthly payments are going to be much higher. But with rates so low, you mightbe surprised as to what you can afford and the benefits of paying it off in 15years as opposed to 30 years are obvious.
Let's look at some numbers. If you were to get a 15 yearmortgage on a $250,000 home with 3.5% down and a 3% interest rate, your monthlyprincipal and interest payment would be $1,677. Say three years ago when rateswere around 6%, if you were to do the same loan only this time a 30 yearmortgage, your monthly payment would have been $1,446 a month. So you can seewhy with rates so low a 15 year mortgage is worth considering these days.
And to give you an idea of the benefits of paying off yourhome twice as fast, how about the number $235,000. That is how much more ininterest you would pay for the life of the loan if you had a 30 year mortgageat 6%, almost as much as you paid for the house to begin with. So the questionis, can you afford to pay a higher monthly payment each month for a 15 yearmortgage? The benefits are obvious and with rates so low, definitely a goodtime to take a closer look.
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