Why a 15 Year Mortgage is a Smart Move

15 year mortgageWhen it comes to purchasing or refinancing a house, borrowers have to consider whether or not they want to go for the 15 year or 30 year option on their mortgage loan. Most people go with the easiest option, which is the 30 year plan. This is because it gives them more time to pay the home down and results in a lesser payment each month. However, you have to think ahead when it comes to personal finance. After all, if you can save a lot of money by going with a 15 year option, it makes sense to consider it from all viewpoints.

The primary difference between a 15 year and 30 year loan is pretty well known. A 15 year loan has a higher monthly payment, but you pay a lot less interest over time simply because it is repaid in half the amount of time as a 30 year loan. It means that you will own your home sooner because more of your payment is going toward principal than interest. When you get a 30 year loan, your monthly payments will be a lot less, but you will pay a lot more interest over time.

Many people who choose a 15 year loan are the same individuals who do a lot of forethought and planning when it comes to personal finance. Instead of simply thinking about today, they look ahead into the future. These people do not want to pay too much for a property simply to save a little bit on the monthly mortgage payment.

Here are some things to consider when trying to choose between a 15 year and a 30 year option on your mortgage:

-What can you really afford?

You need to look at your monthly payment and debt obligations to assess how much of a mortgage payment you can really afford. There are online calculators that you can use to give you an idea of how much you will save between a 15 year and a 30 year mortgage. You might be shocked at how many thousands of dollars you’ll save by going with the 15 year plan. However, if you cannot afford the monthly payment on a 15 year mortgage, it makes no sense to struggle each month.


-Are you saving for retirement?

Although real estate is a pretty safe investment most of the time, you can’t totally depend on it for your retirement. That’s why it’s very important that you’re still putting money aside in your retirement accounts each month. If having a 15 year mortgage keeps you from having the extra income to throw at your 401(k) or IRA, it may not be the best option for you.


-Do you have an emergency fund?

Before you sign up for a 15 year mortgage loan, you need to make sure that you have a good emergency fund in place of at least 6 to 9 months worth of expenses. You never know when you might suffer a job loss or medical issue that causes you to be out of work. Because of this, you don’t want a higher mortgage payment that you can’t handle unless you have a substantial emergency fund in place.


A 15 year mortgage can be of great financial choice for many people. As with anything, it really depends on the circumstances as to whether or not you should make this choice for yourself. Sometimes, it makes sense for a person to start out with a 30 year loan and refinance later into a 15 year option when they are in a better financial position to handle the monthly debt obligation. If you do some research online using amortization calculators, you should be able to see what your savings will be while looking at the two options. Then, you can make plans to put yourself in a financial situation will allow you to take advantage of that 15 year option later if you cannot do it right now.