30 Year Or 15 Year Mortgage: Which Is Better?

Q: I’m buying a home. Do you think I should get a 30 year or 15 year mortgage. Henry, Kissimmee, Fl

A: Great question. You will pay your mortgage off twice as fast and pay considerably less interest with a 15 year mortgage than you will with a 30 year mortgage. However, when you sign a promissory note on a mortgage, you are making a commitment to making regular monthly payments come hell or high water. It’s very difficult to forecast 15 or 30 years into the future and life has a way of throwing unpredictable events and crises at you when you least expect them. In addition, your regular payments associated with your home extend behind principal and interest—they also include property taxes and insurance which are 2 of the 7 things you can’t control in real estate that I write about in my latest book, “Real Estate Investing Secrets”. Your property taxes and insurance can go up in any given year which is why it’s good to have or build a financial cushion in case those non-fixed home-related payments increase the overall expenses associated with owner your home.

There are plenty of financial advisors that will disagree with me, nevertheless, I’d recommend getting a 30 year mortgage-then you can double your monthly payment to achieve a similar result. This will allow you to pay off your mortgage in 15 years if you choose but also gives you more financial flexibility in case of an emergency like an illness or job loss–in that circumstance you won’t be locked into the higher 15 year mortgage payment. Thanks for your question, Henry.

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