15-Year Fixed-Rate Mortgage: Pros and Cons
What is a 15-year fixed-rate mortgage, and how does it stack up against the popular 30-year fixed-rate mortgage?
If you take out a 15-year fixed-rate mortgage, you’ll repay the loan in 15 years and have the same interest rate during that entire period. This means the principal and interest portions of your monthly payment won’t change, which lets you budget more accurately for the future.
Compared to a mortgage with a longer loan term, you’ll end up saving money on interest. But your monthly housing costs are also higher with a 15-year mortgage, meaning it might not be an affordable option for everyone.
So, is a 15-year mortgage worth it? The answer depends on your personal situation. Let’s quickly walk through the advantages and disadvantages of a 15-year mortgage:
Pros and Cons of a 15-Year Mortgage
|Benefits of a 15-year mortgage||Drawbacks of a 15-year mortgage|
|Build equity faster and achieve full ownership of your home sooner||Higher monthly payment|
|Lower interest rates||Less flexibility in your budget for other expenses|
|Less total interest paid||Can’t borrow as much compared to a 30-year mortgage|
15-Year Mortgage FAQ
Get the answers to some frequently asked questions about 15-year mortgages.
Is it harder to qualify for a 15-year mortgage?
Compared to a similar 30-year mortgage, a 15-year mortgage comes with bigger monthly payments. During the loan application process, you’ll need to prove that you can cover those payments, which could make it more difficult to get approved.
One way to make a 15-year mortgage more affordable is to reduce the size of the loan you’re taking out. But that, in turn, affects the types of homes you can buy.
Is it worth it to pay your house off early?
Whether it’s worth paying off your mortgage early depends on your priorities. If you want to be debt-free sooner and save money on interest, choosing a 15-year loan term could help you accomplish those financial goals.