Comparing a 15-year Loan to 30-year Loan

When applying for a home loan, there are plenty of options, from jumbo to low down payment options. Aside from the type of loan, you should determine how long you want to pay off your loan.

Here's a brief overview of the difference between a 15-year and a 30-year loan.

• A 15-year and 30-year mortgage can have a fixed rate and fixed monthly payments over the life of the loan. The difference is that you pay off your loan sooner in a 15-year loan versus a 30-year loan --as long as you make the minimum monthly payments.

• A 15-year mortgage usually has a lower interest rate than a 30-year term loan.

• Monthly payments in a 15-year mortgage are higher because you are paying off the principal faster than a 30-year loan.

• You pay lower interest overall on a 15-year mortgage since the life of the loan is cut in half.