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15 year vs. 30 year Mortgage

January 7, 2022 by Fred
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The differences between a 15 year and 30 year mortgage can be important to homeowners and potential home buyers. There are advantages to consider in choosing the mortgage options that best fit your needs. Although fixed rate mortgages are structured the same, adjusting the loan term to 15 or 30 years makes a difference. The loan repayment term on a mortgage can impact the interest rate and payment amount.

A 15 year fixed rate mortgage often comes with a lower interest rate and a lower total amount of interest paid over the loam term. However, a 30 year fixed rate mortgage term has a lower monthly payment and gives homeowners more flexibility in their monthly budget. The choice between a 15 year vs. 30 year fixed rate mortgage deserves a deeper look at the details.

 

Let’s compare the 15 year vs. 30 year mortgage terms to help you decide which is best for your financial goals:

 

The Advantages

 

15 year Mortgage Term

  • Faster Mortgage Payoff Term – A 15 year mortgage, structures your mortgage payments to a 15 year time frame. A quicker pay-off term also means higher monthly payments to pay back the balance on the mortgage.
  • Lower Interest Rates – Often a 15 year mortgage will have a lower interest rate option than a 30 year mortgage. This means that you will pay less interest on the mortgage each year. Shortening the loan term also means that you will pay less total interest over the life of the loan.

 

30 year Mortgage Term

  • Lower Mortgage Payments – The primary advantage of a 30 year mortgage is having more flexibility in your monthly budget with lower mortgage payments. With monthly payments structured to a 30 year pay off term your mortgage payments are lower than the payments on a 15 year mortgage.

Utilize our mortgage payment calculators to compare what your mortgage payment could look like with a 15 year vs. 30 year fixed rate mortgage term.

Mortgage Payment Calculator

 

Why Homeowners Choose a 15 year Mortgage?

It is important for some homeowners to pay off their mortgage debt as soon as possible. Having a 15 year mortgage cuts the traditional mortgage term in half. You pay much less in interest over the life of the loan and often get a lower interest rate with a 15 year mortgage. In essence, a 15 year fixed rate mortgage is likely the cheapest money you can borrow for a residential property.

The 15 year fixed rate option is a popular choice for homeowners who are refinancing their original mortgage on their home. Refinancing to a better interest rate and term is great way to save money on your mortgage.

Home buyers looking to purchase their second (3rd or 4th) home, are another group that often choose the 15 year fixed rate mortgage option. With the equity earned from the sale of their previous home, they are able to make a healthy down payment and can afford the monthly payments on a 15 year mortgage.

 

Why Homeowners Choose a 30 year Mortgage?

Many homeowners choose a 30 year mortgage term to keep their budget flexible. In fact, 30 year fixed rate mortgages are the most popular mortgage term among American homeowners.
Having a lower monthly mortgage payment means having more room in your budget for other things. Home improvements, family expenses, education costs, or other investments could all be good reasons to choose a 30 year mortgage term.

There are no pre payment penalties on U.S. mortgages. This means that a lower 30 year mortgage payment gives you more flexibility in your monthly budget than a 15 year payment structure. There are no penalties for paying more toward the principal balance each month if you would like to pay the loan off sooner.

For first time home buyers and some homeowners looking to refinance, the 30 year mortgage term is a more affordable monthly payment. After a few years of owning the home and making on time mortgage payments, refinancing to a 15 year fixed rate mortgage is one of the great ways to save money on your mortgage.

5 Ways Refinancing Your Mortgage Can Save You Money

 

 

Our goal is to help you access the best mortgage options available to you. With some of the lowest interest rates and fees in Texas, we are proud to be looking out for the homeowners in our state when in comes to their mortgages.

Whether you are looking for a 15 year or 30 year fixed rate mortgage, we are here to help. Speak with one of our licensed mortgage experts about your home ownership goals today.

 

 
 

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Current Rates

 

Conventional Refinance
15 Yr. Fixed

As of: October 12, 2018

4.25%
RATE
4.353%
APR

Conventional Refinance
30 Yr. Fixed

As of: October 12, 2018

4.875%
RATE
4.949%
APR

VA Home Loan
30 Yr. Fixed

As of: October 12, 2018

5.000%
RATE
5.199%
APR

FHA
30 Yr. Fixed

As of: October 12, 2018

4.75%
RATE
5.534%
APR

FHA
15 Yr. Fixed

As of: October 12, 2018

4.25%
RATE
5.098%
APR
 
 
 

 

 
 

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