Here are four questions that can help you make a more informed decision when comparing a 30-year fixed rate mortgage vs. a 15-year fixed rate mortgage.

1 – What will I do with the difference in cash flow?

There are two main benefits that a 15-year mortgage has vs. a 30-year mortgage:

• 1 – Fifteen year mortgages often carry lower interest rates vs. thirty year mortgages. This could save you some money over time. (See Figure 1 that illustrates what would happen if the interest rate on a 15-year mortgage was 0.5% less than the interest rate on a 30-year mortgage.)
• 2 – Fifteen year mortgages are paid off in half the time of thirty year mortgages. This results in less interest over time and no monthly payments after 15 years.  (See Figure 1.)

Even so, you could…