Compared to a 30-year loan, what is generally true about a 15-year loan?

A 15-year loan typically features a lower interest rate compared to a 30-year loan, which is a significant advantage for borrowers. This lower interest rate occurs because the lender assumes less risk over the shorter term of the loan, as there is less time for economic conditions to change and potentially affect repayment.

In addition to the lower interest rate, the monthly payments for a 15-year loan are usually larger compared to those of a 30-year loan. This is due to the fact that the principal must be repaid more quickly, resulting in higher monthly payments. While the monthly payment burden is greater, the overall interest paid over the life of the loan is significantly less, making the 15-year option attractive to many borrowers who can afford the higher payments and wish to save on long-term interest costs.

This aspect of the 15-year loan, with higher monthly payments but lower overall costs due to interest savings, underscores why this choice is correct.