|Thirty-year or 15-year mortgage? The right answer will depend on your circumstances, but some factors can held decide which way to go.|
"The first thing to look at is the difference in monthly payments between a 15-year mortgage and a 30-year loan of the same size," McBride says. "You want to look at what that 15-year payment will be and decide if you can swing it. If you can't, that will decide it." Fifteen-year mortgages do charge lower interest rates than 30-year loans -- but carry higher monthly payments because you have to pay all principal back in half the time. For example, borrowing $300,000 for 15 years at this week's 3.25% average rate means you'll have a $2,108 monthly mortgage payment (excluding the effect of any origination fees). That's nearly 50% higher than the $1,441 you'd pay if you take out the same-sized loan for 30 years at today's 4.05% average rate (again, ignoring origination fees). Not everyone can afford such higher payments -- or convince the lender reviewing a mortgage application to "greenlight" such a loan. You can check out your potential monthly payments by plugging in specifics from your own situation into TheStreet's mortgage calculator.