A 15-year mortgage forces faster equity building and a lower rate at the cost of a much higher payment; a 30-year keeps payments manageable and lets you invest the difference.
Side by side
| 15-Year | 30-Year | |
|---|---|---|
| Typical rate | Lower (often ~0.5–0.75% less) | Higher |
| Monthly payment | Significantly higher | Lower |
| Total interest paid | Far less | Far more |
| Flexibility | None — payment is fixed and high | Can pay extra anytime, same as 15-year, but optional |
Strengths of each
15-Year — strengths
- Lower rate
- Debt-free in half the time
- Dramatically less lifetime interest
30-Year — strengths
- Lower required payment — more cash flow flexibility
- Can still pay it off in 15 years voluntarily
- Frees cash to invest elsewhere
Worked example
$336,000 at 6.0%/15yr = $2,836/mo, $174,500 total interest. At 6.5%/30yr = $2,124/mo, $428,500 total interest — but investing the $712/month difference at 7% could outpace the interest savings.
FAQ
Is 15-year always the “smarter” choice?
Not automatically — it’s smarter if you wouldn’t otherwise invest the payment difference. If you would invest it at a return above the mortgage rate, 30-year plus investing can win.
Can I get 15-year payoff speed on a 30-year loan?
Yes — take a 30-year loan and voluntarily pay extra toward principal; you get the flexibility of the lower required payment with the option to pay it down fast.