For most of us, buying a home is the single largest purchase we'll ever make. And a big part of that decision is the mortgage terms. We personally prefer our standard 30-year mortgage. It works best for our long-term goals and where we are financially now. That doesn’t mean we won’t embrace the 15-year mortgage in the future, but for now we are standard 30-year mortgagers. There are a few decisions you'll have to make when finalizing a loan:

1. Size of the loan

   This is directly impacted by the sale price and the size of the downpayment you're willing and able to pay

2. Duration of the loan

   For a conventional loan you're generally looking at either a 15 or 30 year mortgage, although there are other options.

Here are some pros and cons for taking the shorter 15 year mortgage:

Pros:

• You own your home faster. You're able to quickly build up equity into your home.

• You pay far less interest. Not only do you pay less due to the duration of the loan, but you'll often qualify for a better interest rate.

Cons:

• Higher monthly payments. You'll have a monthly payment about 50% higher than if you'd taken a 30 year loan. Which means you'll likely afford less house.

• Opportunity costs. Your home is an illiquid asset, meaning it is difficult, impossible or expensive to get your money back out of it. It will leave you with less accessible cash to (for example) invest, start a business or pay for upgrades and repairs.

• Less flexibility. It's easy to make a loan shorter - just make extra payments. As long as you don't have a prepayment penalty, a 30 year loan can easily become a 15, 10 or 5 yr loan. A 15 yr loan can't become a 20, 25 or 30 yr loan should you run into a financial hardship and need the lower payments.

What do you think? Do you have/or plan to apply for a 30 or 15 year loan?