Should You Consider a 15-Year Mortgage Instead of 30?

Should You Consider a 15-Year Mortgage Instead of 30?

When buying a home, one of the biggest decisions you’ll make is choosing your loan term. The traditional 30-year mortgage has long been the most popular option, but in today’s market, more buyers are asking whether a 15-year mortgage might make more sense. Here’s a breakdown of how the two compare.

1. Monthly Payments

• 30-Year Mortgage: Lower monthly payments, which free up more cash for other expenses or savings.

• 15-Year Mortgage: Higher monthly payments, since you’re paying off the loan in half the time.

2. Total Interest Paid

• 30-Year: You’ll pay significantly more in interest over the life of the loan.

• 15-Year: You’ll pay less interest overall, saving tens of thousands of dollars in many cases.

3. Building Equity

• 30-Year: Equity builds slowly since more of your payment goes to interest in the early years.

• 15-Year: Equity builds much faster, giving you financial security and flexibility sooner.

4. Interest Rates

Lenders typically offer lower interest rates on 15-year loans compared to 30-year terms, which adds to the long-term savings.

5. Lifestyle Considerations

• A 15-year mortgage is best for buyers with strong, stable income who can comfortably handle higher payments.

• A 30-year mortgage may be smarter if you want lower payments and more flexibility in your budget.

The Bottom Line

A 15-year mortgage can save you money and help you build equity quickly, but it requires higher monthly payments that may not fit every budget. A 30-year mortgage offers flexibility and affordability but costs more in the long run. The right choice depends on your financial goals, income stability, and long-term plans.