Among the diverse home financing options, is the 15-year mortgage. It has been very popular depending on the difference in interest rates between the 15 and 30 year mortgages. If the spread is small, there is not that much difference between the two.
Perhaps the most attractive features of the 15-year mortgage are a lower interest rate, more rapid equity build up and lower total interest payments over the life of the loan. However, the 15 year loan has some drawbacks.
While home buyers might save more in interest, their monthly payments would be greater. Also, the 15-year mortgage might not be the best instrument for borrowers who move before their loans reach maturity. Because most people do not live in their homes- for the duration of their mortgage loans, it might make sense to examine interest savings over that time frame. Since monthly payments are higher, homeowners might want to explore whether the extra money could be better invested.