Benefits expand as mortgage shortens -
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Published on: 12/21/2001
Last Visited: 2/25/2002
Peter Williamson, a branch manager with Homeowners Assistance Corp., which has offices in South Portland, Wells and Auburn, wasn't sure if the recent drop in interest rates caused an uptick in 15-year loans among customers refinancing.But the firm is doing a lot more 15-year mortgages than it was a year and a half ago.
"If you can afford it, you've got to do it," said Williamson.A 15-year mortgage is a smart investment that builds equity fast, he said, though noting that people earning below the median income usually can't afford the higher payments.
Lenders agreed that even those who can handle the 15-year mortgages nonetheless opt for 30-year loans, even if this tags on upwards of $100,000 in interest.While some just like having more of their paychecks to spend, others see higher payment as too risky.For example, a family may have a large income but only one breadwinner.
Whatever one earns, mortgage payments shouldn't exceed 28 percent of gross income.The recommended cap on all debt payments is 36 percent of gross income.
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