In our current market, the choice between a 15 and 30-year mortgage can differ depending on where your new home is located. In fact, homebuyers in the hottest housing markets across the country – New York City, Los Angeles and like cities, will likely have very different opinions on loan terms than those buying in more regulated markets – like those in much of the Midwest.
However, if you’re not planning on purchasing a home in one of the hot markets, your choice is mainly based on these benefits:
15-Year Mortgage:
- Equity builds faster
- Interest rates are usually lower
- Loan term is shorter
30-Year Mortgage:
- Monthly payments are lower
- Borrowing power is usually higher
- Tax benefits are usually better
With a 15-year mortgage, your monthly payments will be higher, but with a 30-year mortgage, you’ll pay more in interest (in the long run). In the end, it all depends on which things are most important to you, and best fit the current phase of your life.
Source: Trulia