Trust Us To Be Your Voice

Considering a 15-year mortgage

On Behalf of | Jul 24, 2019 | Residential Real Estate

Most homebuyers in Delaware take out a mortgage loan from a bank to complete their purchase. After all, very few people can buy a house in cash outright. The traditional mortgage period stretches over 30 years at a fixed interest rate. However, there are also options for a 15-year, shorter-term mortgage. People buying a home may have several factors to consider when choosing the mortgage loan that is right for them.

First-time homebuyers often have access to special programs supported by the government to encourage Americans to purchase residential real estate. For example, there VA, FHA and USDA loans. Other buyers may still opt for a conventional bank mortgage.

Some people may be considering a 15-year mortgage because interest rates are often lower. In addition, because the mortgage period is shorter and payments are higher, a homeowner can build greater equity over a shorter period. Of course, this also illustrates the major concern with a 15-year mortgage — keeping up with high monthly payments.

Most mortgage preapprovals are based on a 30-year mortgage. Even people with high-paying jobs may find themselves sacrificing for years to meet their 15-year mortgage payments. It may be difficult to pay into other investment options like retirement funds. Many people with a 30-year mortgage can choose to “pre-pay” by adding extra payments to their monthly bill. This can be an important option for those who want to build equity.

The final mortgage choice will depend on the buyer’s financial circumstances. A homeowner can work with a real estate attorney to negotiate a sales contract successfully and determine the best mortgage option to finance their purchase.