If your main goal is to kill off your mortgage quickly while paying as little interest as possible, a 15-year mortgage is tempting. Larger payments knock down your principal at a quicker rate than a traditional 30-year plan, but signing up for such a mortgage might not be the wisest course of action.
A WealthPilgrim post goes over drawbacks of the 15-year mortgages. The loan type limits your financial flexibility, locking up a higher percentage of your budget toward your payments. It may be a smarter move to sign up for a 30-year loan and make extra payments in order to keep plugging away at your principal. That way, if you suffer a financial crisis or would rather divert your funds elsewhere, you’ve got that option. If you take that route, it’s wise to check your loan terms to make sure there’s no pre-payment penalty.
If you’re trying to pay your mortgage off quickly, what strategy are you using?
15 Year Loan – Not Always A Good Idea [WealthPilgrim]