Should I switch to a 15 year mortgage

Most people who own their own homes want them to be paid off as fast as possible. One of the ways people hope to accomplish this is through switching to a 15 year mortgage.

The main factor in determining whether you should switch to a 15 year mortgage is "can you afford the payment" on a 15 year payment. You may be able to qualify for a 15 year mortgage, however you are the one that pays your bills each and every month and you know if you can truly afford to switch to a 15 year mortgage.

If you can afford this route it's a no-brainer, you will save tens of thousands in interest and it sure would be nice to have your home paid off that much sooner!

If you already have a 30 year mortgage, you can pay it off over 15 years simply by making larger payments of principal each month.

One major advantage in switching to a 15 year mortgage is that the 15-year Fixed is about 0.5% lower in interest rate than a 30-year Fixed Rate Mortgage.

Try this scenario on for size:

Figure out the payments you would make over the course of a year (subtracting off the deductions your get for tax purposes) for both a 15 year mortgage and for a 30 year mortgage. Take the difference and squirrel it away in an tax free muni interest bearing account of 5% (yes, you can get such a beast these days). In 15 years you will have more in the side account then what is left on the mortgage which you can then pay off!

Another strategy to pay off your loan faster is to make bi-weekly payments. Sending half of your 30 year fixed monthly payment every two weeks actually adds up to 13 monthly payments in a year rather than 12 since there are just over four weeks in a month. You won't feel much impact on a monthly basis, but the extra payment per year will pay your 30 year loan in between 22 and 24 years depending on the interest rate.

15 year mortgages are great for building equity. They also come with great rates.

» DISCLAIMER: The information contained in this article on 'Should I switch to a 15 year mortgage' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.