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15-Year Mortgage vs. 30-Year Mortgage – Which Is Right for You

If you’re going to take out a mortgage to buy your Denver luxury home, then you have many options available to you. One of the most commonly asked questions is whether a 15-year mortgage is better than a 30-year mortgage. It all depends on your personal situation, but you’ll save far more money with a shorter mortgage term.

15 year mortgage 300x200 15 Year Mortgage vs. 30 Year Mortgage   Which Is Right for You15-Year Mortgage Pros and Cons

There are two very major benefits to taking out a 15-year mortgage. First and foremost, even if you wait until you’re 35 to buy a house, you’ll still own your home by the time you’re 50. That’s a massive investment in your retirement, and it will go a long way toward allowing you to live the lifestyle you want later in life. Second, you can save hundreds of thousands of dollars over paying your mortgage off over the course of 30 years. A 15-year mortgage typically has a lower interest rate, too. Even if you have excellent credit, your bank or lender will give you additional benefits for repaying your loan early in the form of low interest. In fact, you’ll save 0.07% on your interest rate, on average.

30-Year Mortgage Pros and Cons

A 30-year mortgage gives you more time to repay your loan, which means you’ll have much smaller monthly payments. In fact, in most cases, your payments are just under half of what you’d pay if you would have chosen a 15-year loan. This is excellent if you’re interested in a lower monthly payment for the duration of your mortgage, but it does come at a price. The longer it takes you to repay your loan, the more interest you’ll pay over time. Along those same lines, even if you have perfect credit, you’re likely to pay a higher interest rate for a 30-year mortgage than for its 15-year equivalent.

Should You Take Out a Mortgage at All?

When it comes down to it, there are some people who wonder whether it’s in their best interest to take out a mortgage at all. If you can afford to buy your home outright by simply writing a check, why shouldn’t you? There’s one primary reason, and it all has to do with your credit. Regardless of your income or net worth, it’s important to maintain your credit history. Even if you make $5 billion a year, if you have no record of ever having credit, getting credit when you want it is going to be difficult. A mortgage is one of the best ways to build and maintain that credit.

Choosing the Right Option

Now that you understand the differences between 15-year and 30-year mortgages, as well as the pros and cons associated with taking out a mortgage at all, you should be able to make the best decision for your unique financial needs. If you don’t mind the higher monthly payments and you want to own your home quickly, then a 15-year mortgage is the right option. If you want lower monthly payments and you don’t mind paying more interest over time or waiting an additional 15 years to pay off your home, then a 30-year mortgage will work for you.

Everyone is different, and everyone chooses to live a different type of lifestyle. When it comes to buying a luxury home in Denver, you have many choices open to you. For the most part, though, a 15-year mortgage provides the best of everything. It allows you to maintain your credit with less money paid over time, and it puts you on the fast track to home ownership.

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