15 year mortgage loans are becoming more and more common. Once, 30 year loans were common and the 15 year mortgage was all but unheard of. A 15 year mortgage allows you to own your home free and clear in half the time of a 30 year loan and provides significant savings as well!

How can a 15 year mortgage provide savings? Interest on any mortgage is accrued over the life of the loan. By having half as many months for the interest to accrue, you pay less interest over the life of your mortgage! Thousands of dollars stay in your pocket instead of going to the mortgage lender.

There are some major advantages to a 15 year mortgage loan. The first is obvious: your payoff date is 15 years sooner than with a 30 year mortgage payoff. The second is the interest savings mentioned above.

The third advantage to the 15 year home loan plan is that older people can feel more comfortable knowing that their loan will be paid off sooner so they can retire earlier. If you are in your 40’s and buying a home, a 30 year mortgage doesn’t make sense since you will probably end your working life before the mortgage is paid in full. With a 15 year life span mortgage, the payments will end while you are still earning money, so the bank may be more willing to approve your mortgage request!

Are there any drawbacks to the 15 year mortgage loan? Of course there are. Every situation has two sides. The main disadvantage is that the monthly mortgage payments will be slightly higher on 15 year loans than 30 year loans. It is interesting, however, that they won’t be anywhere even close to twice as high. This has to do with accrual of interest applied to your loan.

If you are earning sufficient income to qualify for the higher payments of a 15 year residential mortgage and you reasonably expect your income to be secure, there is no reason not to mortgage for the shorter period of time.

If you want to see the difference in paying a 15 year mortgage and a 30 year mortgage, visit an online loan payment calculator. These calculators are easy to locate, just type in "mortgage calculator" into any search engine (including the one found at the bottom of this page!). Input the price you expect to pay for a home and the current interest rate. Then compare the results for 2 different loan terms.

Once you get the information on how much the monthly payments on the 30 year loan will be, multiply that figure by 360. 360 is the number of monthly payments in a 30 year mortgage. Write this figure down after you get over the shock of the size of the total.

Now, calculate the same information in the mortgage calculator for a 15 year mortgage loan. Once you get the monthly payment, notice that it is much less than twice the monthly payment of the 30 year mortgage. Multiply the monthly payment by 180, the number of payments in a 15 year mortgage.

Compare the two figures. You will find that the total amount paid to the lender on the mortgage in 15 years is much, much less than the figure for the longer 30 year mortgage. This is how to calculate your actual saving by taking out a shorter home mortgage!

If you buy your home as a young couple, having your home paid for in full within 15 years allows you time to save money to help your children meet college finances. If you are older and buying a home on a 15 year mortgage, you can pay the home off and save money toward retirement. It can be hard to save for other expenses while paying monthly house payments.

If you have financed your home with a 15 year fixed-rate mortgage and want to save even more money, you can add money toward principal in monthly payments whenever possible. When you pay toward principal, be certain the money is clearly marked as a principal payment. The funds will reduce the principal of the loan and raise your equity while lowering the overall cost of the loan. Even if you can only pay a few hundred dollars toward principal each year, you will find that the final payment on your loan comes much sooner.

Calculating 15 year and 30 year loans or anything in between is very complex. Rely on the valuable online mortgage calculators to let you learn more about payment totals and mortgage life spans. A good loan calculator will even have a place to input additional payments toward principal and allow you to learn how you can benefit. Anything that reduces the total amount you pay to the bank over the life of your 15 year mortgage is well worth the time to learn more about.