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Why don’t more Boston condo buyers take out a 15-year mortgage rate?

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Question: It’s obvious to me that paying off your Boston Back Bay condo or Boston Beacon Hill condominium as fast as possible is good in many ways. It gives you a sense of security knowing that you’ll always have a roof over your head. By paying off a mortgage in 15 years instead of 30, it means you’ll have more money to spend on other things much sooner. In fact, it seems to me that it makes great sense to take out a 15-year mortgage and make extra payments on top of that every month. If you make an extra mortgage payment every month, you could have the mortgage paid off in less than 8 years.

I’m a professional structural engineer and the math for a 15-year mortgage seems clear to me. I’m about to buy my first house and I know that almost everyone goes with a 30-year mortgage. There must be something that I’m overlooking. Why don’t most people just choose a 15-year mortgage?

Answer: Your engineering background is clearly showing. From a pure math point of view, you are correct. However, most people must consider many other variables when deciding how long to finance their homes. For most people, it is a social-economic balancing equation. They must make decisions between how much they can afford to spend on a home compared to how much they have to remain to spend on the lifestyle they want.

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Updated: Boston Real Estate Blog 2022

From the Boston Herald:

Fifteen-year mortgages dropped to a historic low last week while the 30-year rate came close to hitting bottom on the heels of the nation’s top bank pumping cash into a troubled real estate market.

“The Federal Reserve purchased more than $1 trillion worth of mortgage-backed securities from Fannie Mae and Freddie Mac and that’s driving down mortgage rates,” said Karl Case, an economist at Wellesley College. “The Fed wants to save this housing market at all costs.”
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