If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.
Maurie Backman is a personal finance writer who covers topics ranging from Social Security to credit cards to mortgages to REITs. She also has an editing background and appears on live podcasts to talk about financial matters.
Choosing between a 15-year and 30-year mortgage is a major financial decision that can impact your budget and long-term goals. While a 15-year loan offers quicker repayment and lower overall interest costs, a 30-year loan provides more affordable monthly payments and greater flexibility.
Understanding the pros and cons of each can help you decide which option best suits your financial situation. We'll it break it down below.
Check out today's 15-year mortgage rates here.
Check out our 30-year mortgage rates here.
With a 15-year mortgage, you’ll repay the loan in half the time compared to a 30-year loan. This means you'll be mortgage-free sooner, but it comes with the tradeoff of higher monthly payments. A 30-year mortgage, on the other hand, spreads out your payments over a longer period, making each payment smaller but extending your financial obligation for a much longer time.
A 15-year mortgage requires higher monthly payments since the loan is paid off in a shorter time frame. This can make it harder to manage alongside other financial goals. In contrast, a 30-year mortgage offers lower monthly payments, making it easier to fit into your monthly budget, but you’ll be making payments for decades.
With a 15-year mortgage, you'll pay significantly less in total interest over the life of the loan due to the shorter term and typically lower interest rates. In comparison, a 30-year mortgage leads to higher overall interest payments because you’ll be borrowing money for twice as long.
Lenders often offer lower interest rates on 15-year mortgages since they carry less risk due to the shorter loan term. This can save you a substantial amount of money in the long run. A 30-year mortgage generally has higher interest rates, meaning more of your money goes toward interest over the years.
The higher monthly payments of a 15-year mortgage can be a challenge for many borrowers, but it may work for those with higher incomes or fewer financial commitments. A 30-year mortgage is often more affordable for first-time buyers or those with tighter budgets, as the lower payments provide more breathing room each month.
With a 15-year mortgage, you’ll be putting more of your income toward your home each month, which could limit your ability to invest or save for other financial goals. A 30-year mortgage allows for more short-term financial flexibility, letting you save or invest the difference between the lower mortgage payment and what you’d pay on a 15-year loan.
A 15-year mortgage lets you pay off your home much faster, giving you full ownership in half the time and allowing you to build equity more quickly. A 30-year mortgage keeps you in debt longer, but it can make homeownership more attainable while spreading out the financial burden over three decades.
When deciding between a 15-year and 30-year mortgage, it’s important to understand the financial impact of each option.
Using September 2024 rates, let’s compare a $100,000 loan:
Even though the monthly payment is higher for the 15-year mortgage, the savings in interest over time are substantial. The 30-year loan might be more affordable month-to-month but costs significantly more in the long run due to the extended repayment period and higher interest payments.
Ultimately, choosing between a 15-year or 30-year mortgage comes down to your monthly budget. If you can afford the higher payments, a 15-year loan can save you a lot of money in the long run. However, if you need a lower payment to maintain financial flexibility, a 30-year mortgage may be the better choice. Be sure to run the numbers to see what works best for your financial situation.
Ready to get a mortgage? See our list of the top mortgage lenders to get started today.
It depends on your goals and budget. Focus on the monthly payment you can afford to determine if a 15-year or a 30-year mortgage is better for you.
This also depends on your goals and budget. If a shorter mortgage repayment period will not disrupt any other goals like retirement or put you in financial duress, it can save you money in the long run. However, if your mortgage payments for a 15-year mortgage are going to be a big stretch financially compared to a 30-year mortgage, you may be better off with longer repayment terms.
With a 15 year mortgage, your repayment period is 15 years or 180 monthly payments. With a 30-year mortgage, you are repaying the terms of your loan over a 30-year period, usually about 360 monthly payments.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Please note that this calculator is not personalized financial advice and should not be considered or used as such. Nor are we promising that by use of this calculator, will you be able to save more money, preserve wealth, or otherwise.
