There are pros and cons to both 15- and 30-year mortgages. A 15-year mortgage will save you money in the long run because interest payments are drastically reduced since you’re paying only 15 years’ worth of interest versus 30 years. The second major benefit is that 15-year mortgages often carry lower interest rates.
However, a 15-year mortgage comes with larger minimum monthly payments, which can mean less cash flow.
The advantage for homebuyers with 30-year mortgages is that they have the option to pay more than the minimum required monthly payment. This means they can pay off their mortgage in 15 years, but they’re not required to do so. So if you can’t afford the extra amount one month, you won’t risk a ding on your credit report.
You can compare interest rates on both types of home loans by inputting rates and terms into Bankrate’s 15-year mortgage calculator as well as the 30-year mortgage calculator.
Use this information to find out how much your monthly payments will be for each mortgage type. This is a great way to see what you can afford, how much you can save and which product is right for your budget.
A 15-year mortgage is good for people who…
A 30-year mortgage is good for people who…