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Choosing A Fifteen Year Mortgage Is Not A Good Idea

mortgageQuestion: For some time I have been wondering if I should consider getting a fifteen (15) year mortgage, as I do not want to be burdened with a mortgage in addition to condominium fees. Assessing how and when to consider such a change is confusing to me, and I would appreciate your advice on the advantages and disadvantages of the fifteen (15) year versus the thirty (30) year mortgage.

Answer: I must state at the outset that I am biased against the fifteen (15) year loan. While there have been many commentators who have praised what they perceived to be the benefits of a fifteen (15) year mortgage, in my opinion, such a mortgage rarely makes sense for the average homeowner.

Let’s look at some examples. You want to compare a $300,000.00 loan to be amortized on a thirty (30) year basis as compared to a fifteen (15) year basis. Lenders typically will provide a lower interest rate if you take a fifteen (15) year loan rather than the thirty (30) years. So for comparison purposes, let us assume that a 30 year loan is 4 percent and a 15 year loan is 3.5 percent.

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