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15 Year vs. 30 Year Mortgage

Mark Minder, MBA, RFC, DWG VP of Retirement Plans and Benefits

With mortgage rates at historical lows, one of the questions that we face from homebuyers and those looking to refinance is which is better: a 15 or 30 year mortgage?  The answer to this question is - it actually depends on the person and their life goals.  The following comparison will give you quick reference points on which one is best for you.

15 Year Mortgage Pros:

  • Total costs of home ownership could be lower
  • Build equity on home faster
  • Interest rate would be lower

15 Year Mortgage Cons:

  • Higher monthly payments
  • Possibly more of your money tied up in home purchase

30 Year Mortgage Pros:

  • Lower Monthly Payment
  • Afford more home

30 Year Mortgage Cons:

  • Total cost of home ownership could be higher
  • Higher interest rate
  • Possibly over purchase of home due to lower payments

Looking at current rates as of August 28, 2020 a 15 year fixed mortgage is 2.600% and a 30 year fixed mortgage is 3.120%(these would be non FHA/VA Mortgages).  What does this mean to you, the home buyer?  Using the following assumptions what is your possible monthly payment in principal and interest, not including insurance and local/state property taxes.

Home Purchase: $350,000

Down payment: 10% or $35,000

Monthly Payment

  • 15 Year Mortgage: $2,115
  • 30 Year Mortgage: $1,349

Total Ownership Costs

  • 15 Year Mortgage: $415,745
  • 30 Year Mortgage: $520,471

Your home is typically one of the largest fixed assets that American’s buy.  The decision on which mortgage is right for your goals and your wallet both short and long term is a personal decision.  There is not a one size fits all answer much like all personal financial decisions.

This is just the basic highlights of questions regarding mortgage options with historical low rates.  We welcome the opportunity to delve deeper into a topic with you or answer further questions. Please contact our office at invest@dardenwealth.com or 734-294-0100 for more information.



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