Thirty and fifteen year mortgages both offer some benefits and drawbacks for potential home owners. Both types of mortgages are preferable in different situations as well. Read on to learn about the pros and cons of each type…

Fifteen year mortgages generally have a somewhat lower interest rate, make it possible to finish making payments 15 years earlier, and reduce the total amount of money which has to be repaid (regardless of the interest rate). For example, according to the payment calculator on bankrate.com, the monthly payment for a 15-year mortgage of $150,000 at six percent interest would be about $1,266. At the same rate for 30 years, the payments would be just under $900 per month. However, by the end of the 30 years, the home owner would have repaid a total of $323,640, whereas the total would only be $227,880 for a fifteen year mortgage. With a lower 15-yr. interest rate, the savings would be even greater. When monthly payments no longer have to be made after fifteen years, a large amount of extra income will become available, and it will be much more possible to retire from your employment at that time.

On the other hand, thirty year mortgages have some advantages as well. Being able to afford the monthly payments on these mortgages is more realistic, especially if the mortgage is for $50,000 dollars or more. While the difference between the monthly payment for 15 and 30 year mortgages is only about $61 for a $25,000 mortgage at six percent, it greatly increases to a $244 difference when a $100,000 mortgage is considered. Thirty yr. mortgages may also be preferable if you plan to resell the property and want to have a greater amount of income available for making repairs or improvements. Additionally, it should be taken into consideration that either 15 or 30 years is a very long period of time, and you may want to spend more money on other purposes rather than devoting a large portion of your income to the larger payments on a 15 yr. mortgage.

Overall, fifteen year mortgages are the best choice financially, if your income is high enough and you are likely to be able to sustain that level of income. A longer mortgage period is preferable if you cannot afford the higher 15-year payments and/or expect to resell the home relatively soon.