How to Choose Between a 15 and 30 Year Mortgage

Posted: 9/22/2016 | Read Time: 3min
Last Updated: 5/21/2021

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When it comes to mortgages, you’ve got options.

Becoming a homeowner can be about making choices both large and small. In terms of your mortgage, at Wyndham Capital you can choose between a 10-year3 mortgage, 20-year4 mortgage, 15-year1 mortgage and 30-year2 mortgage. Wyndham Capital Mortgage is here to explain the difference between two of the more popular options – the 15-year1 and 30-year2 mortgages.

How to Choose Between a 15 Year1 and 30 Year2 Mortgage

You Can Go With This…

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One great advantage of opting for a mortgage with 15-year1 terms is you’ll be able to pay it off faster. This could be a great option if you don’t want to be saddled with debt over a longer period of time. And because you’re only paying your mortgage for 15 years, you get to cut down on the amount of interest you accrue over the long term. Another great thing about 15-year1 mortgages is you can potentially build equity in your home faster. If you aren’t familiar with the term, equity is the difference between what your home is currently worth and the amount you have remaining on the balance of the mortgage. One thing to keep in mind with your home’s value is that it’s also influenced by the current market. It’s entirely possible that your property’s value increases the same with a 15-year1 mortgage as it would with a 30-year2 mortgage, it all depends on the current market.

In regards to the disadvantages of a home loan with 15-year1 terms, you’ll likely have a higher monthly payment than you would a mortgage with a longer length. Depending on your current and future finances and budget, you might opt for a longer-term loan.

 

Related: 5 Answers to Frequently Asked Mortgage Questions

…Or You Can Go With That

One thing you should know about 30-year2 mortgages is they’re the most common. You might not even be aware there are other options besides a 30-year2 mortgage. Depending upon your situation, you might feel the lower monthly payments that come with a loan with 30-year2 terms to be a more comfortable option. Even if you can currently afford the payments of a shorter mortgage, you might not want to.

Another plus in the 30-year2 home loan column is you may have more cash to use on your other financial goals. You might be fine with longer loan terms if it means you can pay off your credit cards and car payment faster or put more money in savings. Then, if you want you can devote more of your funds to larger mortgage payments.

Pro-tip:

“Taking out a 30-year2 mortgage doesn’t mean you can’t pay off your home in 15 years. Your payment is a minimum payment, and, in many cases, there are no prepayment penalties. This puts the term entirely in your control. Advantages: 1. If you have a financial hardship in the future you can revert to your minimum payment. 2. The ‘required’ payment is lower on paper and will allow you to better qualify for additional financing in the future. Disadvantage: 1. The interest rate is higher.”

Mark Taylor, Loan Officer, NMLS#1504731

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Consider the above pros and cons when deciding which mortgage terms to accept. Gather info from your mortgage lender as well as your friends and family who currently have mortgages. Want more info? Let us help!


1 Example of a 15-year fixed payment: $360,000 loan amount, 180 payments of $2,078 not including taxes, insurance, and HOA dues, at 2.125% APR.
2 Example of a 30-year fixed payment: $360,000 loan amount, 360 payments of $1,349 not including taxes, insurance, and HOA dues, at 3.010% APR.
3 Example of a 10-year fixed payment: $360,000 loan amount, 120 payments of $3,292 not including taxes, insurance, and HOA dues, at 1.875% APR.
4 Example of a 20-year fixed payment: $360,000 loan amount, 240 payments of $1,930 not including taxes, insurance, and HOA dues, at 2.625% APR.


Mark’s number one mission and passion are to have lasting relationships to serve your family, friends, and community. His background in education has allowed him to provide an informative approach, where clients are 100% involved and in control of their mortgage process, while his mortgage experience will provide high-level insight and suggestions to maximize return on investment. Mark’s core values are centered around integrity, fiduciary-focused solutions, and community. While homeownership is the number one American dream - It is also a tool to build wealth and financial stability if the right decisions are made. As a Senior Mortgage Consultant with Wyndham Capital, it is Mark’s passion to listen to individual needs and structure the perfect rate/cost/payment combination based on a myriad of factors so that your financial future is bright.

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