One of the common questions people have regarding mortgages is whether a 15-year or 30-year mortgage is better? Like many financial decisions, the right answer depends on your personal financial circumstances, objectives, and concerns. What stage of life are you in right now? All of these are factors in deciding on a 15- or 30-year mortgage.
A 15-year mortgage can save you a lot of money. Using a 15-year mortgage you will pay less money to buy your home. However, your monthly payment will be higher than going with a 30-year mortgage.
So, to decide what mortgage is right for you, there are few things to consider.
Can you afford the higher payment of a 15-year mortgage?
It's a pretty simple question. Can you make the monthly payment with a 15-year mortgage? Will you have enough money left over to pay for all of your living expenses, contribute to your retirement, and save a little for rainy days? If not, you may want to opt for a 30-year mortgage.
Do you have money saved up for a rainy day?
Are you able to financially handle emergencies and tough times? What if unforeseen circumstances, like job loss, affected your life? Would you have enough savings left to help you with the higher payment of a 15-year mortgage?
Do you have money saved for a down payment?
Having a good sized down payment for a home can help you achieve a lower payment. This might allow you to opt for a 15-year mortgage, own your home sooner, and save lots of money over time. However, your current financial situation may be more suitable for a 30-year mortgage even with a down payment. The lower payment may allow you to focus on other financial priorities.
Is a lower payment your goal?
Perhaps you desire a lower payment for specific reasons. Maybe you'd like the extra money each month to pay down debt or contribute to investments. Maybe you are saving for a particular purpose. It all depends on your specific needs and wants.
Useful Mortgage Resources:
- Mortgage rates – Browse mortgage rates for various mortgage products.
- Loan and Savings Calculators – Crunch the numbers. How much home can you afford? What should your down payment be? Use our calculators to explore your options.
- Mortgage Products - Browse mortgage products.
- Mortgage Application - Are you ready for the next step? Apply for a mortgage.