Why a 30-Year Mortgage Can Be a Wise Choice Financially


Some mortgage experts recommend paying off a home loan early. The sooner you pay off a mortgage, the sooner you can achieve a measure of financial freedom. Plus, getting rid of a home loan early reduces how much you pay in interest over the life of the loan.

 But while a 15-year or a 20-year mortgage saves money in the long run, a 30-year mortgage might be a wiser alternative.

 You Can’t Put a Price on Flexibility

 Some people don’t like the idea of debt, so they aim to pay off their mortgages as soon as possible. This is why they choose 15-year mortgages. But even if you share this mindset, you don’t need a 15-year loan to achieve this.

 Nowadays, most mortgages don’t have prepayment penalties, which penalize borrowers for paying off their home loans before a certain period of time. Even if your loan had a prepayment penalty, your lender would only charge this penalty for the first three years of the mortgage term. Therefore, if you wanted to pay off a 30-your home loan in 5 years, 10 years or 15 years, you could do so at no additional cost.

 The truth is, a 30-year mortgage offers the best of both worlds because there’s flexibility. You can pay down your balance slowly over the next three decades, or you can make extra principal payments every month to pay off the balance sooner. With a 15-year mortgage loan, your home loan payment will be higher, and you’re obligated to make these higher payments each and every month.

 More Opportunities to Invest and Save

 A 15-year term might increase your mortgage payments by $400 or $500 each month, depending on how much you owe. This might be a drop in the bucket if you’re making good money and can afford to pay down your home loan while achieving other financial goals. But if you can only choose one option, a 30-year mortgage can make sense in your situation.

 Instead of choosing a shorter term and pouring all your money into the house, you can take advantage of a cheaper house payment that comes with a longer mortgage term. With the savings, there’s more opportunities to invest in your future. You can better prepare for retirement or increase your net worth with other investments, perhaps stocks, bonds, real estate, etc. Or if you have credit card debt or student loans, use your disposable cash to pay off these balances. Additionally, choosing a 30-year mortgage and getting a lower monthly payment helps you live life to the fullest. Are there hobbies you want to explore or places you want to visit? If you can save on your house payment every month, it’ll be easier to achieve these goals.