There are definitely pros and cons about whether or not to take out a fifteen year mortgage versus a 30 year mortgage. First of all with a fifteen year mortgage you will obviously get it paid off 15 years faster. This is excellent because you have fifteen additional years without having a mortgage payment.
You now have 15 years without having a mortgage payment and this will definitely give you peace of mind. Not to mention the interest you save is astronomical and you can use those savings to invest or take a vacation, an addition to the home or practically for whatever it is you want to do.
One of the cons for a 15 year mortgage is now you have a larger payment which in essence takes money from your disposable income. If there is a financial emergency and you are not able to make your mortgage payment this can be quite devastating, which is why you should always have money set aside for such emergencies. A larger payment can definitely be a strain on the budget of some who have not adequately prepared the budget to take on a larger payment. If you fall behind two payments on your mortgage then it will really be hard to come up with those payments and get back on track and in good financial standing.
Another good thing about a 15 year mortgage is even though your term is 15 years, if you can afford to do so, you can still make additional payments on that loan and pay it off even earlier that the schedule you are set up for. Even an extra $50 per month will do wonders I helping you get your mortgage paid off faster. However if you ever send in extra payments always include a note that states the following: “I would like this payment of $50 to be applied to my principle balance”. That will ensure the extra payment is applied to the principle and does not go to interest or the escrow account. If your interest rate is fixed you have the peace of mind knowing that you will always have the same payment and that the loan is fully amortized over the entire period.
Also if it turns out your mortgage payment is too much too handle because of a 15 year mortgage you can always refinance and stretch the payments out to something that is more comfortable and maybe consolidate some other nagging credit card debt in the process. So there are a variety of options to look at and consider when you are thinking about taking out a fifteen year mortgage.