If you’ve been looking at mortgages, you’ll have to determine the terms of the loan. There are several differences between a 15-year mortgage and a 30-year mortgage that you should consider when determining the right mortgage for your new home purchase.
Here is a comparison between the two mortgages.
15 year mortgage
•Higher monthly payment: The monthly payment of a 15-year mortgage will be higher than a 30-year mortgage because the amount of time to repay the loan is shorter.
•Lower amount of total interest paid: Lower interest rates and shorter repayment terms resulting a lower amount of total interest paid on the loan. Some homeowners can save well over $100,000 on the total purchase of their homes, depending on the amount of the loan.
•Stricter qualifications: Qualifying for a 15-year loan can be a bit tougher than qualifying for a 30-year loan.
•Lower monthly payment: The monthly payment for a 30-year loan is lower than a 15-year loan because the amount of time to repay the loan is longer.
•Higher interest rates: 30-year mortgages have a slightly higher interest rate than a 15-year mortgage.
•Higher amount of total interest paid: Because the length of time for repayment is longer, you can expect to pay a larger amount of interest during the life of the loan.
•Easier qualifications: Qualifying for a 30-year loan is a little easier than a 15-year loan.