As a Lakeland real estate professional, I am often asked by my clients to provide mortgage resources and information – especially in regards to what type of mortgage they should consider. When this happens, I happily refer my customers to Kevin Sandridge, a Lakeland area mortgage broker, and good friend of mine.
Recently, I had a client talk to me about whether they should consider a 15-year fixed mortgage. Here’s what Kevin had to say on the subject.
Kevin relayed that Lakeland home buyers and homeowners who can handle the higher mortgage payments that come with a 15-year fixed rate mortgage can reduce their principal loan amount nearly 3 times faster than if they opted for a standard 30-year fixed rate option.
This is great news for those who prefer to carry mortgage debt for as little time as is necessary. However, Kevin stated that 15-year fixed mortgages do present some things to watch out for.
“The first thing your Lakeland real estate clients should watch for when deciding whether to go with a 15-year fixed rate mortgage related to their yearly taxes. Because the 15-year fixed rate mortgage product goes heavy on principal and light on interest, Lakeland homeowners who itemize tax returns will most likely end up claiming a smaller mortgage interest tax deduction at tax time. Of course, I’m not a tax professional, so they’d want to verify this with their accountant. But, this rule is pretty standard.” – Kevin Sandridge, Lakeland area Mortgage Broker.
Another negative Kevin mentioned for Lakeland home buyers and home owners to be mindful of is that the sheer size of their mortgage payment may end up being too much for them to handle comfortably.
So, consider what may happen if you run into financial trouble down the road. The only way to reduce your monthly mortgage payment after opting for the 15-year fixed rate option would be to refinance your Lakeland mortgage into a 30-year product – and this option will cost you money in closing costs and other ancillary fees.
In other words, be sure you can cover your mortgage payments over the long-term before you opt for a 15-year term. If you can manage it, though, the rewards – specifically in how fast you pay down your principal balance – are tangible.