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Today we wanted talk about some differences between 15-year and 30-year mortgages, and also a slightly different alternative to those two traditional loans.
In today's market, I'm sure you know that interest rates are at an all-time low, but that's not going to last forever. When you're looking at buying a home in Minneapolis, your main options are 15-year and 30-year mortgages. The main difference is how they amortize those payments, so what we're looking for is the best payment and the shortest amount of time so we can decrease the interest that we pay.
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Many buyers like the idea of a 15-year mortgage, but can't afford the payment because it's so much higher. So consider this...
You'll knock eight years off your mortgage by saving interest.
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Instead of a 15-year mortgage, you can take out a 30-year mortgage and make one extra payment per year. You make 13 payments per year instead of 12 payments. That extra payment can seem daunting, so instead of paying it all at once, you can simply add 1/12 of the payment amount to your monthly mortgage payment to spread it out over the course of the year.
Why? By increasing your payments by just 1/12 each month, you'll knock eight years off your mortgage by saving interest. It's a really cool strategy that anyone can take advantage of and turn a 30-year mortgage into a 22-year mortgage without the stress of the skyrocketed payment amount that comes with a 15-year loan.
If you're interested about this topic or have any questions, feel free to give me a call today.
