Deciding Between a 15-Year and 30-Year Fixed Mortgage

Fixed-rate mortgages are the most common loan types consumers look into. Besides term length, the primary differences between 15 and 30-year fixed mortgages are in the interest rates and monthly payments. A 15-year mortgage will typically have a lower interest rate but higher monthly payment, while a 30-year will have a higher interest rate but lower monthly payment. Both products offer distinct advantages, dependent on a few financial considerations.

30-Year Fixed Mortgage

The 30-year mortgage offers a significantly lower monthly payment as opposed to a 15-year. For instance, a $100.000.00 loan will give you principle and interest payment of $449.04 for 30 years (rate 3.5%) vs. $690.58 for 15 years (rate 3.00%). This allows for several things. Firstly, the difference in monthly payment enables you to potentially take out a higher loan amount than you would be able to afford with a 15-year loan. The higher loan amount could be the difference in allowing you to get your dream home. The lower monthly payment also allows you to save more money and work toward other financial goals.

While the 30-year mortgage enables increased month-to-month flexibility, in the long run, you will wind up paying more interest throughout the loan as opposed to one with a shorter term. This means building home equity takes more time as well.

15-Year Fixed Mortgage

If a higher monthly payment is palatable, the 15-year fixed mortgage is a strong option. Besides paying off the loan faster, less interest is paid as opposed to the 30-year loan. The interest rate itself will be lower, and building equity in the home is a much quicker process.

While saving a considerable amount in interest, the 15-year fixed mortgage can leave you with less cash monthly due to the higher monthly payment. Furthermore, the loan amount you can qualify for will be lower.

What makes sense for you?

Both the 30-year and 15-year fixed mortgages have clear differences and benefits. If you are looking to buy more house, the 30-year will enable you to qualify for a higher loan amount. You will also have a lower monthly payment, allowing you the ability to build savings and work toward other financial goals. However, if you can afford a higher monthly payment, the 15-year mortgage will save a considerable amount in interest paid, while also expediting the equity building process.

What is worth considering when weighing the two options is how long you plan on living in the home. If the idea is to live in the house long term, saving on interest by going with the 15-year mortgage is wise. If it is likely that you will look to move after a short time, the 30-year loan will allow you to benefit from the lower monthly payments while not having to pay as much interest if you were to occupy the home for the life of the loan.

As always, our knowledgeable Loan Officers will be able to help you make the right choice for you and your family. You can reach us at (800) 448-8101, or email us at

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