15 Year Mortgage Or 30 Year Mortgage?

When financing your home, you'll be presented with several mortgage options to choose from, including the length of time you want to pay off the loan. Deciding between a 15-year mortgage or a 30-year mortgage depends on what's feasible to you. With a 15-year mortgage, your payments will be higher. However, you'll own the house outright in half the time and pay less in interest, resulting in big savings.  Additionally, your equity would build faster so if you wanted to move, you'd have more money to put down on a new home.

It is a bit riskier to be locked into a larger monthly payment for many home buyers even if they qualify for a 15-year term.  You wouldn't want to feel stretched too thin financially. Remember with owning a home, you'll have maintenance and repairs that you'll want to be prepared for.  A 30-year mortgage is ideal for most home buyers and you have the flexibility of making larger payments or extra payments at your discretion. With a smaller monthly payment, you can increase your savings and you'll be able to claim the mortgage tax deduction for a longer period of time.

With both mortgages, you'll be able to save money,  just in different ways. So how do you know which is right for you?  That all depends on how comfortable you are paying a larger monthly payment, your job security and your long term financial goals.

If you can comfortably manage the larger payments of a 15-year mortgage, it makes the most sense financially. In the end, it is ultimately what a home buyer feels most comfortable with. If you are uncertain, you may want to seek advice from your licensed mortgage professional and/or financial planner.