Is it better to get a 15-year mortgage or pay extra on a 30-year mortgage?

A 15-year mortgage has some advantages compared to a 30-year mortgage, such as lower total interest paid, a lower interest rate, lower fees, and forced savings. However, it also has some disadvantages, such as higher monthly payments, lower affordability, and less money earmarked for savings. A 30-year mortgage may have more permissive income requirements compared to a 15-year term. The extended repayment period results in lower monthly payments, making it easier for borrowers to meet debt-to-income criteria of lenders.

Consequently, this can improve the accessibility of homeownership for people with different income levels. When it comes to mortgage conditions, 15-year mortgages are perfect for those with the income needed to make higher monthly payments. If you have a larger amount of money that you would like to allocate to your mortgage and you want to lower your monthly payment, consider reformulating your mortgage. But just because you're not ready to commit to a 15-year mortgage doesn't mean you can't enjoy the benefits of paying your mortgage early.

This is because mortgage loans are amortized and most of the early mortgage payments go to interest and only a small amount to repay the principal. Refinancing to change the term of the mortgage can affect your finances, whether you're thinking of reducing the duration of the loan from 30 to 15 years or extending it in the opposite direction.

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