15- and 30-year Mortgage Loans: What is right for you?

When you’re sifting through your options for mortgage loans, one of the biggest questions you’ll find yourself asking is whether a 15- or 30-year loan is right for you. As you can imagine, this is not a “one size fits all” decision. Both types of loans have their pros and cons. Here’s an overview of the differences between 15- and 30-year mortgages, so you can determine what may be best for your unique situation.

15-Year Mortgages

15-year mortgages can intimidate borrowers because the monthly payments are higher. However, because the interest rates are lower and the length of the loan is shorter, you will actually end up paying less for your mortgage overall. Typically, the cost is between half a percent and one percent less than a 30-year mortgage. While this may not sound like a lot right now, it will definitely accumulate over time!

30-Year Mortgages


This is the most common type of mortgage. Because you’ll be paying your mortgage off over a longer period of time, you can expect your monthly payments to be more affordable. However, interest rates are higher, making the total cost of a 30-year loan more expensive than its 15-year counterpart.

That being said, there are plenty of reasons why homeowners think that these mortgages are the more desirable of the two options. Most importantly, a 30-year mortgage may give you the ability to buy a house that is valued at a higher price than you’d get with a 15-year mortgage.

How to Determine the Loan That’s Best for You

When deciding on what type of mortgage is ideal for you, look at the bigger picture. What are the expenses you’re covering right now besides the cost of your home? Are there other goals you’re working toward that require you to open your wallet? If so, you may want to go with a 30-year mortgage so you have more disposable income right now for other things.

In addition, a 30-year mortgage will also help you build up your savings. Home expenses generally carry the most weight on your monthly budget. When monthly payments are smaller (as is the case with a 30-year mortgage) you can put away more money in savings, which could go toward a new car, your child’s college fund, your own continuing education, or something else important.

On the other hand, if you have a little more disposable income at the moment, you may want the 15-year loan because it will ultimately save you money. Maybe you’re a young couple with plenty of income and you’re not planning on having kids until several years in the future. Getting a larger portion of your house paid off first may be in your future’s best interest.

Another consideration you’ll have to make is in regards to a prepayment penalty. You may be tempted to just make bigger payments on your 30-year mortgage so you can pay it off quicker and enjoy the lower price of a 15-year mortgage. However, if your mortgage came with a pre-payment penalty, you won’t get off that easily.

Ask the Advice of Experts!

Still unsure what suits your needs based on differences between 15- and 30-year mortgages? The Carolina Mortgage Team at Revolution Mortgage can help! We can even help you determine how much money can you save with a 15-year mortgage! To get started with your application, contact us today.

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