Should You Choose a 15-Year or 30-Year Mortgage?

Los Angeles and South Bay Real Estate Video Blog with Lenny LaRocca

The biggest difference between a 30-year mortgage and a 15-year mortgage is cash flow. The 15-year mortgage offers more of it, and here’s what you can do with it.

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What’s the difference between a 30-year and a 15-year mortgage?

Between the two of them, the biggest difference is cash flow. With a 15-year mortgage, you’d obviously be paying the mortgage off in half the time. Additionally, the bank would give you a lower interest rate because they’d get their money back in half the time.

For those who can afford it, a 15-year mortgage is a better option.

What does this mean for you as a homeowner? Why should you consider the 15-year mortgage over the 30-year mortgage? Aside from cash flow, there are three other benefits a 15-year mortgage offers:

1. Once you end your 15-year mortgage, that gives you more cash to invest in other options like retirement accounts
2. You can spend that extra cash flow to increase your current home or lifestyle.
3. It gives you extra cash flow to bid higher for a nicer home down the road.

In summation, by compressing your loan period from 30 years to 15 years, you’re ending the loan more quickly, you’ll have a much more favorable interest rate, and it puts you in a better position to have cash for other options down the road.

If you have any questions about this topic, please feel free to give me a call. I’d be happy to speak with you!