Mortgage Free In 15 Years!

Imagine paying your mortgage off in 15 years! Think of all the great things you could do with that extra money. What would you do? Retire early? Buy an R.V.? Travel around the world? If you could eliminate your mortgage in half the time, then your options would be wide open.

Let's take a look at 3 benefits and 3 considerations when evaluating whether or not the 15 year fixed rate mortgage, is right for you:

1. Lower Interest Rate
2. Huge Savings on Interest Paid
3. Mortgage Paid in 15 Years
4. Affordability
5. Expendable Income
6. The 15 Year Loan as an Investment

1. Lower Interest Rate:

The 15 year amortized fixed rate loan carries a lower interest rate.

• The interest rate is usually about ½ % the rate of a 30 year term.
• For example, as of today's date, the average 30 year fixed is going for about 5.67%, while the average 15 year fixed is going for about 5.10%.
• That's a savings of .57%!

2. Huge savings on Interest Paid:

Do you want to save a ton of money? A 15 year fixed will accomplish this for you.

• Let's look at a $300,000 loan. Over the course of 30 years, at 6% interest, you will pay the bank $347,514 in interest. (Yes that's right. You're paying the bank 115% of the loan value, over the course of 30 years).
• However, with a 15 year fixed rate loan, at 5.5%, you will only pay $141,225 in interest (Wholly smoke! That's a savings of $206,289!).

What would YOU do with $206,289?

3. Mortgage Paid in 15 years:

Because the loan is amortized for 15 years, instead of 30 years, your commitment to the bank is cut in half.

• This is an enormous advantage. After 15 years, money normally applied to a house payment can be applied to investments.
• Or, you can begin considering alternative careers, retirement, or home improvements.
• Or you can just spend that extra money on fun stuff and goodies.

Any way you look at it, cutting your commitment down to 15 years affords you many more options in life.

So we've established that a 15 year loan clearly has some amazing benefits. But, is the 15 year loan right for you? Let's take a look at some important considerations:

4. Affordability:

Even though the 15 year fixed rate loan enjoys a ½% savings in interest, there is still the question of affordability.

• For example, a $300,000 mortgage, amortized over 30 years at 6%, equates to a monthly house payment of $1798.
• But the same loan amortized over 15 years at 5.5%, equates to a monthly house payment of $2,451.
• That's an extra $653 per month, or a payment that's 36% higher than a 30 year fixed.

Can you afford the long-term commitment of a 15 year fixed rate loan?

5. Expendable Income

The 15 year fixed rate loan is an important consideration if you have extra income and you are looking to apply it somewhere. Ask these important questions:

• Are all your bills getting paid?
• Do you have low debt?
• Are you spending too much each month on luxuries?
• Are you spending too little each month on productive investments and savings?

If money's got you down, and things are tight, and if there are other financial areas for you to explore first (such as paying off credit cards), then perhaps the 15 year loan may not be right for you, at least not right now.

Start by completing a budget analysis, and figure out a plan to get you from point A to point B.

6. The 15 Year Loan As An Investment:

This is really, the most important consideration. A 15 year fixed rate loan is more of an investment then anything else.

• The financial benefits of a 15 year fixed rate RIVALS the benefits of a 401k, Roth IRA, and Mutual Fund performance.
• You need to compare the money saved (in our example, that's $206,289) to the performance of your other investments in your portfolio. Remember to calculate in the extra money you are paying for the 15 year loan (in our example, that's $653 per month), so that you can determine a net profit.
• If you are exploring ways to build wealth, and apply your money in a productive way, then you need to seriously sit down, and figure out how to get a 15 year loan incorporated into your plan.

Remember, money saved, is money earned!

We've enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

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About The Author Copyright 2005, by LoanResources.Org , This article is available in full format at: Mortgage Free , Tom Levine provides a solid, common sense approach to solving problems and answering questions relating to consumer loan products. His website seeks to provide free online resources for the consumer, including rate-watch, tips and articles, financial communication, news, and links to products and services. Article Source: http://EzineArticles.com/?expert=Tom_Levine

Bad Credit Mortgage Lender - What to Look For

If you have less than perfect credit and are looking to get approved for a mortgage loan, be careful not to make some common, costly mistakes. When dealing with sub-prime mortgage lenders or bad credit mortgage lenders, many people are taken advantage of because of their eagerness to get approved.

Choosing and settling on a mortgage lender or mortgage broker is a very important decision. Make sure you don't make mistakes that you will regret later.
Ask yourself, the mortgage broker or lender these questions before you sign on the dotted line:

1. Is there a pre-payment penalty on the loan? Ask about this as soon as you are told you are approved. A 6 month pre-payment penalty is probably ok, but 1 year, or two years? Over 1 year is too long. Find out how much the pre-payment penalty is. Maybe its not much. But if there is one, its most likely to be so much, that it would defeat the purpose of refinancing the loan before the penalty time is up. If you are get a mortgage loan with a poor credit score, and then make your mortgage payments on time, you are likely to be able to refinance in 6 months to 1 year for a much better interest rate. You don't want to hurt your chances of doing that with a heavy pre-payment penalty. Sometimes brokers will neglect to tell you about one.

2. What will the interest rate be? Sounds obvious, but lock down exact numbers. Don't settle for vague answers on this. Brokers may promise you a low interest rate, but as it gets closer, end up locking you in at a much higher rate. If you are doing a combo loan, 80/20, the second mortgage may end up being the one that has an interest rate that surprisingly jumps up as it gets close to the loan closing. Try to negotiate a lower interest rate, especially if you are going through a mortgage broker, they will usually have some play in this area.

3. Is my mortgage broker being too pushy? If you feel your broker is being too pushy, there may be something in the loan that is not in your best interest. Ask a lot of questions and don't be afraid to start searching elsewhere. When getting a mortgage loan, you don't want to be in too big a hurry.

4. Can I afford the payment even I am not able to refinance for a lower rate within 2-3 years? Many people get into a sub-prime mortgage loan with a higher interest rate, just because they are happy to get approved, only to feel suffocated later, when they cannot refinance and get out from under the high payment. If you don't think you could make the payment for at least the next 2-3 years with no problem, then you shouldn't be getting into the loan.

5. What are my closing costs going to be, exactly? Bad credit mortgage lenders and mortgage brokers know that the person they are extending the loan to doesn't have as many options. These lenders and brokers can sometimes take advantage of that fact by upping the fees at closing. Make sure you see what all of your fees are going to be in writing before you commit to the loan. Compare those fees with other lenders and make sure they are comparable. If there are a little high, try negotiating with your mortgage lender or broker. They will usually be able to make changes there if they choose to.

It helps to choose a bad credit mortgage lender based on a
referral based on a referral, one who has a good reputation. Choose a company with a long standing reputation and make sure you feel comfortable working with them.

There are many lenders now, who specialize in bad credit mortgage loans. These are the best lenders to start with.

Written by Carrie Reeder, owner of http://www.abcloanguide.com, an informational website on mortgage loans, with articles and lists of recommended bad credit mortgage lenders. Article Source: http://EzineArticles.com/?expert=Carrie_Reeder