Deciding a 30- vs. 15-Year Mortgage
The right answer will depend on your circumstances, but some factors play a role in deciding which way to go. Today's record-low mortgage rates are giving consumers the choice of two great options -- 30-year mortgages that charge just over 4% interest or 15-year loans with rates nearly down to 3%. The first thing to look at is the difference in monthly payments between a 15-year mortgage and a 30-year loan of the same size. You want to look at what that 15-year payment will be and decide if you can handle it. If you can't, that will decide it. Fifteen-year mortgages do charge lower interest rates than 30-year loans -- but carry higher monthly payments because you have to pay all principal back in half the time. For example, borrowing $300,000 for 15 years at 3.25% average rate means you'll have a $2,108 monthly mortgage payment (excluding the effect of any origination fees). That's nearly 50% higher than the $1,441 you'd pay if you take out the s