Should You Get a 30-Year or 15-Year Mortgage?
Last week, we wrote about what you should expect if you get a 30-year fixed mortgage. Another popular option is a 15-year fixed mortgage. Both will keep your interest rate and monthly payments the same throughout the life of your loan, but how do you know which one is right for you?
The main differences between a 15 and 30-year loans are pretty straightforward. With a 15-year fixed mortgage, you’ll be paying higher monthly payments compared to the 30-year, however you’ll also end up paying way less in the long run due to interest. You’ll also be able to build equity relatively quickly with the 15-year loan compared to the 30.
When considering which choice is right for you, figure in how long you plan on staying in the house. If you are more likely to move in a few years, the high monthly payments might not seem worth it for you, since you won’t be keeping the mortgage for that long. However, since the 15-year fixed loan allows you to build equity faster, that money would be available for you when you decide to sell or if you want to refinance.
Before deciding which loan is best for you, decide which option fits into your long term financial plan. Can you afford the higher monthly payments now to save money in the long run, or will it be easier for you to pay lower monthly payments? If you have a good amount of cash stored away and want to own your home quickly, a 15-year fixed mortgage may be the option for you.
Calculate your options here.