30 or 15 Yr Fixed Mortgage

Probably the most common of all conventional mortgages: the 30 year loan. Thirty years is a long enough time for buyers of multiple ages to be able to consider the loan and also it makes monthly payments much more manageable! 

A 30 year fixed rate loan is exactly what it sounds like. The length of the loan is thirty years and the interest rate doesn’t change during the life of that loan 1(30 years). These loans are very popular, especially for those looking to purchase their forever home as the life of the loan is so long. 

One issue that arises is qualifying for said loans as they’re not under any sort of program. The fixed part of the loan is also hard to swallow sometimes when interest rates are high. However, the stability the loan offers often outweighs the minimal cons! 

Because the interest rate for this loan is fixed for three decades, it’s important for buyers to do what they can to lower their interest rates as much as possible. The two factors buyers have control over are their down payment and their credit score. So, when buyers are looking to purchase a home and utilize this common loan type, it’s best to put down as large of down payment as one can afford and work on keeping their credit score as high as possible.

A 15 year fixed mortgage offers the same benefits of a 30 year loan — a fixed rate, set monthly payments, etc. but is paid in full in half the time. That means you own your home in 15 years! That also means — your monthly payments are much higher. This may not be a bad thing though for some buyers! If purchasing a home well within budget and with smart financial planning; 15 years can be perfect timing! 

There can be minimal interest rate differences also between 30 year and 15 year loans which is another selling point for 15 year loans. While 30 year loans are by far the most popular, it’s worth taking a look at 15 year mortgages. Interestingly enough, the cost at the end of the day between a 15 year vs 30 year loan ends up being lower for a 15 year loan because of the double amount of time that the interest has to grow for a 30 year loan. 

If one can afford the monthly payments for a 15 year loan — that’s often the best bet. It’s important either way though to really look at your finances and future financial goals in order to decide what length of mortgage is best for you.

That being said, take time to get prepared and ready to make the best purchase possible and settle into your home and mortgage for the next several years!