CCMC on Facebook
Home Buyer

15 vs. 30-Year Mortgage: Which is Better?

Whether to choose a 15-year or a 30-year mortgage loan is a decision many borrowers face. There’s no wrong or right choice. The decision depends on what you can afford and your unique circumstances. Still, there are pros and cons to both options. 

Understanding how a 15-year loan differs from a 30-year mortgage can help you decide the right choice.

Pros of a 15-Year Mortgage Loan

Pay off home loan sooner. A 15-year mortgage loan is unique because you can pay off your mortgage balance in half the time. This is perfect if you don't want to be saddled with a home loan for the next 30 years, especially if you’re retiring within 15 or 20 years and prefer not carrying a mortgage into retirement.

Build equity faster. Both a 15-year and a 30-year mortgage build equity. But since a 15-year mortgage pays off the home loan balance sooner, there's an opportunity to build equity faster.

Pay less interest. A 15-year mortgage loan is also attractive because they typically feature lower interest rates than a 30-year mortgage. Since it's also a shorter home loan term, someone who receives a 15-year mortgage pays less interest over the life of the loan.

Cons of a 15-Year Mortgage Loan

Higher monthly payment. In spite of the fact that a 15-year mortgage pays off the home loan sooner and builds equity faster, these loans also have higher monthly payments. Therefore, this loan is only a good idea for borrowers who can afford the higher cost.

Smaller mortgage interest deduction. Keep in mind that since borrowers with a 15-year mortgage pay less interest over the life of their loan, they also write-off less interest on their tax returns compared to borrowers who have a 30-year term.

Bottom Line

When everything is said and done, a 30-year mortgage loan is usually the more affordable solution, especially for first-time homebuyers. The good thing about a mortgage loan is that many lenders give borrowers the option of making additional principal payments at any time. So even if you select a 30-year mortgage, you can always submit extra payments and pay off the loan earlier, without committing to a 15-year mortgage. Use a biweekly mortgage calculator to see how much you could save.