Should You Get a 15-Year Mortgage on Your Santa Cruz Real Estate?

Posted by Lauren Spencer on Wednesday, December 30th, 2009 at 7:17am.

There are a lot of financing options to help you buy Santa Cruz real estate, if you can meet the credit guidelines. 

Most lenders prefer to use 30-year mortgage loans.  With a longer loan term, the lender can collect more money in interest over the life of the loan.  For those who are credit-worthy, a 15-year mortgage term may be offered.  So, what is the difference between the two?  Here are a few guidelines:

What About a 30-Year Mortgage?

Thirty-year mortgages are becoming the normal term for Santa Cruz real estate loans.  The payments are usually more affordable and lenders are quick to recommend them.  Lenders are more likely to offer you a higher loan amount with a 30-year loan, but the trade off is usually a higher interest rate. 

What Are The Benefits Of A 15-Year Mortgage?

Signing up for a 15-year mortgage can save you a lot of money in interest payments.  True, your monthly payments will be higher than with a 30-year loan, but the impact on your long-term finances may be worth it.
 
After just 16 years, you can start investing the money that you're no longer spending on your mortgage into other real estate properties or investment opportunities.  You can build your investment portfolio with just the money you would’ve spent on your monthly mortgage payment.

What about Prepayments?

Even if you do decide to take out a 30-year loan, you can still have some of the same benefits of the 15-year loan.  By making prepayments, you can take years off a 30-year loan and still have the freedom of making smaller monthly payments, if you need to.  Before finalizing your decision, ask your lender if there are any penalties for making prepayments.

A 15-year mortgage is usually the better financial decision, because you can save thousands of dollars over the life of the loan.  The interest on a loan may be halved by choosing a 15-year loan.

No matter how you choose to finance your Santa Cruz real estate, I can help you find the home that meets your needs and budget.  Call me today at 831.662.6522 or email me at lauren@laurenspencer.com for more information.

 

LINKS:

Benefits of a 15-year mortgage

Investing

Prepayments

 

About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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