15 vs. 30 Year Fixed Mortgage Pros and Cons

If you’ve been pre-approved for a mortgage and met with a loan officer at First Ohio Home Finance, you’ve probably been faced with the decision to get a 15 or 30 year mortgage. Let’s take a deeper dive into the pros and cons for each loan to help you make the best decision in the long run.

15 Year Fixed Mortgage

There is less interest on a 15 year mortgage, but your monthly payments will be larger than a 30 year. A 15 year mortgage can benefit you if you are close to retirement and do not want the responsibility of a mortgage in retirement. Since you will be paying more per month and in less time with a 15 year mortgage, you will have the advantage of building up your home’s equity faster than a 30 year mortgage. Then, you can use that home equity as you need, be it a home improvement or paying for college. Your debt-to-income ratio will be higher with a 15 year mortgage because the monthly mortgage payment will be higher. So you won’t qualify for as large of a loan. The major drawback of the 15 year mortgage loan is that you’re locked into a higher payment. If for any reason money becomes tight, the higher mortgage payment can be a real burden.

30 Year Fixed Mortgage

Choosing the 30 year fixed mortgage route is the more popular decision for most homeowners. If you opt for a 30 year mortgage, you will have lower monthly payments, but obviously a longer pay-off period. This option is a good choice if you plan on being in your home long term, for example, if you are a young family just starting out. Because your monthly mortgage payments are lower, a 30 year mortgage allows for more investment in your personal savings, as well as being able to pay off debts like student loans and credit cards. If monthly cash flow is your biggest concern, or you earn commissions and your income varies the 30 year fixed rate loan might be the best choice. Because this loan type comes with the lowest monthly payment, it will also leave you with more money in your budget each month.

The best way to resolve the 15 vs. 30 year mortgage question is to meet with a mortgage loan officer at First Ohio Home Finance. Our loan officers take a careful look at your finances, determine your housing goals, and help you calculate which loan type makes the most sense for you. Contact us today to meet with a loan officer and buy the home you’ve been waiting for!