Should I get a 30-year or a 15-year fixed mortgage?

By Ann White

Should I get a 30-year or a 15-year fixed mortgage? Read here to determine if a 30-year or 15-year mortgage is right for you!

For many people who are looking to buy a home, one of the most confusing decisions to be made is what type of mortgage to purchase. Two of the most common mortgage products available are 30-year and 15-year fixed mortgages. Deciding which of the two mortgages you should select takes careful consideration. The following considerations should be taken when selecting a mortgage.

Interest Rate Difference

The first consideration to be taken when deciding whether to get a 30-year or a 15-year fixed mortgage is the interest rate difference. More often than not, a 15-year mortgage has a lower interest rate than a 30-year mortgage. If the interest rate is 0.50% lower with a $200,000 15-year mortgage, the interest savings will be over $80 per month.

Payment Affordability

The next consideration to be taken when deciding whether to get a 30-year or a 15-year fixed mortgage is your monthly payment affordability. Since a 15-year mortgage is paid off much faster than a 30-year mortgage, the payments are much higher. Assuming a $200,000 mortgage with a 6% interest rate, a 30-year payment would be $1,199. With a 15-year mortgage and a 5.5% interest rate, the payment would be $1,634. If you can not make the higher payments you are better off selecting the 30-year mortgage.

Other Fees Paid

The next consideration to be taken when deciding whether to get a 30-year or a 15-year fixed mortgage is whether other fees, such as PMI, need to be paid. If PMI is required, the borrower will need to pay PMI until their equity in equals 20%. If the borrower elects for a 15-year mortgage, they will reach the 20% threshold much quicker.

Should I get a 30-year or a 15-year fixed mortgage?

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