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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?
from the Consumerist
Our strategy is to move. Right now, we pay 1800$ a month on a 30 year mortgage. I've been researching homes, and plan to move to the Atlanta suburbs in the next 2-3 months. We'll be downgrading only in terms of $$$, the housing market down there is priced very reasonably(along with Atlanta having a large and diverse job market). For a home of similar size to ours(2500 sq ft), on a couple acres, we're talking around 120K, instead of the 289K we paid for our home. A 15 year mortgage will run us anywhere from 650-800 a month. Just on the difference of mortgage payments, we'll be saving atleast an additional 10K a year, along with paying off the home much quicker.
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