Is a 15-year Mortgage a Good Idea?

    If you consider the current difference in a 15-year loan is approximately ½% lower, then, yes, it may a good idea.  But, if you can't afford the higher payment amortized over half the time of a 30-year, then, no, it may not be a good idea. It may be good for some people based on their ability to make a higher payment if one of their goals is to build equity in their home faster or to pay it off sooner. The term of the mortgage is a long-term commitment.  You are agreeing to make the specified payment each and every month.  If funds are tight one month, they don't allow you to make the 30-year payment one month and go back to the 15-year payment the following month. An alternative to getting a 15-year loan, would be to get the 30-year loan and make the payments as if it were a 15-year mortgage.  You won't benefit from the lower interest rate available to shorter term mortgages, but the principal will reduce to match the shorter term.
    $300,000 Mortgage

    30 years

    15 years

    Interest Rate

    3.64%

    3.16%

    Mortgage Payment

    $1,370.69

    $2,094.91

    Unpaid balance at end of 10 years

    $233,436

    $116,127

    Additional Monthly Payment

    $724.22

    Additional Total Payments

    $86,906

    Savings

    $30,403

      To see what it would be for your situation, use the 30yr vs. 15yr Comparison.
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