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What is better for us - a 15 or a 30 years fixed mortgage rate?

The monthly payments for 30 year or 15 year fixed mortgages are the main considerations for many people who are looking to buy a home. Many of us are buying homes later in life these days so it is not unreasonable to have the house paid off early. Although before signing any documents, there are many things to consider. It is important to make sure that the interest rate doesn’t change over the course of the loan.

Avoid the mortgage loans offered by some lenders, those that sound unbelievable because they usually are. The interest rate should remain the same for fixed rate mortgages until the loan is repaid. This is of great benefit for anyone that does not like surprises. When my wife and I were looking at homes for sale we decided to check out the various loans available with 15 year fixed mortgage rates.

It was always our intention to clear our mortgage debt as early as we could but we didn’t want to over extend ourselves at the same time. When we considered fixed rate mortgages we also looked into even longer term loans that spanned 30 years as well. The problem was that we weren’t very happy about having a mortgage close to when we both retired so it was our hope a 15 year fixed mortgage rate would still be available to us. There was obviously very good reasons to finish paying the loan off early.

After careful consideration we decided to take the longer term 30 year repayment option instead of the 15 year plan. There were many things that lead us into making this choice. The main reason was that I found out my wife was pregnant. My wife was going to raise our child from home so her addition to the monthly income would be restricted. The downside to the 15 year fixed mortgage rate was the higher monthly repayment. We knew that it just wasn’t an option and the risk was too great. We found that the monthly repayments on a 30 year loan were more manageable.

Being able to make additional lump sum payments during the year means the outstanding loan reduces faster. To our surprise we also discovered that we could knock years off our loan by doing this. This may be difficult but well worth the effort in the a few years down the line. Our first choice would have been to go for the short term 15 year fixed rate mortgage solution but this did not help with our more immediate situation. Things worked out well anyway, even though we were unsure about it to start with.

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