As far as finishing your mortgage as quickly as possible and paying as little interest as you can, a 15-year loan is the best.
Its short-term nature allows you to trim your balance faster and build plenty of equity on your property in no time. This is ideal for would-be retirees too; it could relieve pressure off your monthly budget and get your loan paid off before you stop working.
However, a 15-year home loan in Portland, Miami, San Diego, or any other major market, would come with a price. Although they’re not necessarily disadvantageous, but these are the things you might have to give up to get it:
Low Monthly Payment
The short mortgage term would cause you to shoulder your entire balance in fewer months. Even if you get a low-interest rate, you might be paying over 50% more than your monthly repayments with a 30-year loan.
Large payments bring less flexibility, considering your financial situation may take a turn for the worse in the future. If you lose your job or get a medical problem down the road, your big mortgage repayments may prove to be too heavy to shoulder.
As your monthly payments would be huge, you might not qualify for a big loan amount.
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In turn, you may be limited to modest properties, which may not be perfect for growing families.
Even if you have the pristine credit and a stable job, lenders would also your consider debt-to-income ratio. If you have little room in your budget to accommodate an enormous mortgage expense, a 15-year loan may not buy a huge property.
Other Investment Opportunities
Many individuals would rather put their cash on other places than to their mortgage. A 30-year loan may take a while to mature, but its low monthly repayments loosen up the budget.
On the other hand, you may not feel as liquid with a 15-year mortgage. You might have small dispensable money to build up other savings, like in a 401(k) retirement account.
Just like with other types of mortgages, you get some and lose some with a 15-year loan. If you have a large income to afford its potentially large monthly repayments, go ahead. If you don’t, explore your more options first.