What are the advantages and disadvantages of a 15-year mortgage?

The 15-year fixed rate mortgage offers two big advantages for most borrowers:

You own your home in half the time it would take with a traditional 30-year mortgage.
You save more than half the amount of interest of a 30-year mortgage. Lenders usually offer this mortgage at a slightly lower interest rate than with 30-year loans - typically up to .5% lower. It is this lower interest rate added to the shorter loan life that creates real savings for 15-year fixed rate borrowers.

The possible disadvantages associated with a 15-year fixed rate mortgage are:

The monthly payments for this type of loan are roughly 10 percent to 15 percent higher per month than the payment for a 30-year.
Because you'll pay less total interest on the 15-year fixed rate mortgage, you won't have the maximum mortgage interest tax deduction possible.

Who should consider a 15-year mortgage?

The 15-year fixed rate mortgage is most popular among younger homebuyers with sufficient income to meet the higher monthly payments to pay off the house before their children start college. They own more of their home faster with this kind of mortgage and can then begin to consider the cost of higher education for their children without having a mortgage payment to make as well. Other homebuyers, who are more established in their careers, have higher incomes and whose desire is to own their homes before they retire, may also prefer this mortgage.

Compare Them Yourself

Use our calculator to help decide which loan term is best for you.

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