When you put a down payment on a house and sign up for that big commitment – a mortgage – sometimes you may find that the advice of a bankruptcy attorney may be invaluable. As many Americans have found out over the last five years with the housing bubble bursting, expectations have changed. If you are looking to buy a home, and have a reliable income, signing up for a 30 year mortgage and paying it off in 15 years could make a world of difference!
Why Its Smart
When you get a 30-year mortgage, you pay only a slightly higher interest rate than if you had a 15-year mortgage. However, if you have the funds to pay a 15-year mortgage, there’s nothing stopping you from paying it off in that time frame! By doubling up on your payments, you can save huge amounts of money in the long run.
People often ask if they should refinance their 30-year mortgage to a 15-year timeframe. The short answer is no! The slightly lower interest rate you’ll receive for making this move probably won’t make up for the high closing costs associated with the refinancing. Rather than refinancing to get a 15-year mortgage, just treat your 30-year mortgage like you would a 15-year one!
A nice benefit of operating this way is that if your income decreases, you can always make the “30-year payment” your mortgage requires. But, if you’re on the 15-year track, you’re committed to those bigger payments!