Is Buying A House With A Short-Term Mortgage A Good Idea?

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Deciding between a short-term, 15-year and 30-year mortgage isn't easy. Each one brings costs and benefits, and it can be difficult to arrive at an answer.

We have come up with a few tips on helping to determine whether a short-term mortgage is the right decision for you. 

When you’re choosing a mortgage for your first single-family home, you’re able to apply for government-issued loans. These include conventional loans, FHA loans, VA loans, USDA loans and bridge loans. Check out the best option for you.

Pros, Cons Of A Short-Term Mortgage

You may be interested in choosing a 15-year mortgage because you heard that it helps build equity on your home faster and saves you money with lower interest rates.

If you have a high-paying job with stable income, then you may be correct with this decision. But there are reasons why you may not want to choose this option.

With a short-term mortgage, you will have to pay more each month compared to that of a 30-year term. Having a 15-year mortgage gives you less wiggle room with your money.

You may have to sacrifice other financial goals in order to pay higher payments each month.

Pros, Cons Of A Long-Term Mortgage

With a long-term mortgage, you have more room to save more money for other financial goals. 

You will pay less per month than with a 15-year and can take advantage of your mortgage deductions for a longer period of time. You have the option to “prepay your mortgage” in order to get ahead and pay it off faster. 

You will have to pay higher interest rates than with a short-term mortgage plan. For example, Wells Fargo & Co WFC has 30-year fixed-rate APRs of 4% versus 3.34% for the 15-year.


Your lender could penalize you for prepaying your mortgage, so you should talk to them to find out if that's a possibility.  

It will take longer to build your home equity.

Is A Short-Term Mortgage For You?

It’s ultimately up to you. If you’re eager to pay off your mortgage in less time and feel that you have the ability to do so within the next 15 years, then you might want to do that to avoid the higher interest rates of a 30-year mortgage. Take time to understand your own plans for your financial future and do as much research as you can.

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