There are several mortgage plans that Americans can secure, from VA to FHA loans. Each one varies in terms of loan terms leading to various loan rates and eligibility prerequisites. This means that there’s an ideal loan for everyone, regardless of their financial situation.

Most mortgages will generally boil down to two different plans: the 30- or 15-year mortgage rate. However, the simple difference in contract duration isn’t the only thing that differentiates one from the other.

Understanding mortgages

Mortgages are termed loans secured by a real estate property. For term loans, the borrower pays interest over time on a calculated annual basis against an outstanding balance due to a monthly rate and payment agreement. Initially, most of the repayments of the borrower will be for the pre-assigned interest. However, as the interest share declines, the repayments will then go toward the principal value.

The choice of going for a 15- or 30-year mortgage term can complicate the formula above a bit, making it crucial to recognize the potential benefits or drawbacks of the two.

Breaking down a 30-year mortgage

30-year mortgages are more common to homeowners familiar with the American archetype. It’s not unlikely that your parents and grandparents secured this type of loan to purchase your childhood home. In 30-year mortgages, the balance will shrink at a slower pace, simply due to the longer duration of the borrowed amount. Unlike a 15-year loan, the principal balance declines much slower, albeit with a higher interest rate.

The most common advantage of 30-year mortgage loans is the low monthly payment. It also allows the borrower to buy more than one property since they have more flexibility in financing options.

Getting debt cleared faster with a 15-year mortgage

Shorter-term loans will lead to higher monthly payments, which could make people less willing to take them. However, there are several reasons people still consider it over the lengthy and seemingly more affordable 30-year plan.

Most consumers live fast-paced lives and want to move to the next stage in their life as soon as possible. This reflects not just on homebuyers but also on the overall real estate trading process. With a 15-year mortgage, you will significantly pay less interest cost due to the shorter term. 

Unlike 30-year mortgages that can have costly additional fees, 15-year mortgages are more straightforward. Even the Federal Housing Administration charges higher mortgage insurance premiums for 30-year borrowers. However, it’s not always the perfect fit for someone who cannot afford the substantially higher monthly payments.

Choosing between 15-year and 30-year mortgage loans

The question of “Which is better between a 30-year and 15-year mortgage” isn’t a simple one to answer, primarily because it has to factor in the homebuyer’s financial growth. For example, a 30-year loan can seem like a stable investment. However, it can be less enticing with the upkeep of additional fees and insurance premiums necessary to protect it. On the other hand, 15-year mortgages will be a considerably shorter term of repayment but include the high risk of putting homeowners into having “forced saving” funds.


The only way to gauge one mortgage plan over the other is by understanding your financial strategies and meeting the right timing and mortgage lender. Knowing the limits of what you can afford in the long-term will help expand your options when choosing a reliable mortgage provider for financing.

Getting a loan shouldn’t be difficult, which is why you need to get professional advice on your side when making crucial long-term decisions. At Loan Solutions Now, our mortgage brokers can connect you with providers with the best mortgage rates in Louisville, KY. Chat with our mortgage brokers today, and we’ll ensure that you’ll find the right financing plan for you!