The 15-Year Mortgage: Pros and Cons


Many buyer shy away from a 15-year mortgage and choose a 30-year instead.  Why is this?  And is that the right choice for YOU? 

NerdWallet published a great article that clearly discusses the pros and cons of a 15-year mortgage.  It's worth a full read, but here are the details outlined for you:

PROS:

  • Shorter path to full homeownership
  • Build equity faster
  • Save money

CONS:

  • You HAVE a higher payment
  • More equity is locked up
  • Opportunity cost
  • Qualify for less home
  • You lose some tax advantages

 

EXAMPLE:

  • A 30-year fixed-rate mortgage at 3.88% has monthly payments of $1,176 and a total interest cost of $173,471
  • A 15-year fixed-rate mortgage at 3.19% has monthly payments of $1,749 and a total interest cost of $64,890 — a savings of $108,581 if you kept the loans for their entire terms

MORE: Calculate and compare 15-year vs. 30-year mortgages