The trade-off in one sentence
A 15-year mortgage costs far less in total but demands a much higher monthly payment; a 30-year mortgage costs more but leaves cash free every month. Everything else is detail.
The numbers on a $350,000 loan
At 5.85% over 15 years the payment is roughly $2,920 and total interest about $175,000. At 6.6% over 30 years the payment is roughly $2,235 and total interest about $455,000. You pay about $685 more per month to save roughly $280,000 over the life of the loan.
The case for 15 years
- A materially lower rate, for free.
- Vastly less interest, and equity builds two to three times faster.
- The mortgage is gone in 15 years — a large advantage if that lands before retirement or before college costs.
- Forced discipline: the saving happens whether or not you feel like it.
The case for 30 years
- The lower required payment is genuine financial resilience during job loss or illness.
- You may invest the difference at a potentially higher expected return than the mortgage rate.
- You can voluntarily pay it down on a 15-year schedule and stop whenever you need to. A 15-year loan offers no such reverse gear.
- Qualification is easier, so you can buy sooner or buy more.
Does investing the difference actually win?
Mathematically it usually does when the expected investment return exceeds the mortgage rate — but only if the difference really is invested, every month, for thirty years, through market crashes. The behavioural evidence is that most people do not. If you know yourself to be an inconsistent investor, the 15-year loan's forced saving is likely to leave you better off in practice than the theoretically superior alternative.
A reasonable compromise
Take the 30-year loan for its flexibility and set up an automatic extra principal payment sized to retire it in 15 to 20 years. You give up the rate discount but keep the option to stop. For most households with variable income, that optionality is worth more than the 0.75 percentage points.