Before choosing a lender, fighting over closing costs and arguing with the home seller about whether the air conditioner needs charging, mortgage shoppers ask themselves a seemingly simple question: 15 years or 30?
But the decision between a 15-year mortgage and a 30-year mortgage isn't always simple. The 30-year mortgage has lower monthly payments, yet ultimately costs more; the 15-year mortgage mortgage requires higher monthly payments, but builds equity faster.

It can be a tough call.

"It's never a bad idea to pay off debt faster. It's never a bad thing," says George McReynolds, a certified financial planner and vice president of lending at Warrington Mortgage Corp. in Feasterville, Pa. "But sometimes, there's a second right answer. Sometimes there are better things that can be done with the money.

"They have to look at the bottom line," he adds. "They can't just look at it in a vacuum."

Weighing the benefits

The 30-year vs. 15-year debate has been around almost as long as the mortgage itself. With 30-year loans, borrowers generally get lower monthly payments even though their rates are higher. That's because the longer amortization schedule spreads the additional cost of the rate differential -- which was roughly 30 basis points in mid-September -- over twice as much time. People can buy larger houses or keep their payments on smaller homes affordable as a result.

Fifteen-year mortgages, on the other hand, help buyers own their homes sooner. Even though their payments are larger, they build equity faster because more of each payment goes toward principal rather than interest. The lower interest rate and shortened term make the loans cheaper by lowering the overall interest bill.

"You get a substantial benefit on a 15 from the lower rate. And because it's a shorter payoff period, you're paying down the balance at a much more rapid clip," says Jack Guttentag, a syndicated columnist who also runs the Mortgage Professor Web site. "But people who are on a strict budget and are focused much more heavily on the payment are going to gravitate toward the 30."

In recent years, planners have tried to get consumers to consider their loans in a broader context. Instead of just looking at which has higher payments and which has lower rates, a borrower should consider how the loan will fit into a broader financial plan, they say.

People who want to build equity as quickly as possible generally will go with 15-year loans. That's great for consumers who have reserve cash stored away somewhere, but it can be dangerous otherwise. If the higher payment leaves the borrower with hardly any money to save each month or if the borrower starts out with no savings at all, even a minor family or financial emergency could cause major problems.

McReynolds recalls what happened to a good friend of his who worked as a utility lineman. In 1990, he had to go into a manhole to repair damage done by a contractor, but because someone had inadvertently flipped a switch, he got burned. In the past, he never had trouble making his 15-year loan payments because of all the overtime pay he earned during the harsh Northeast winters.

But he had to spend two months in a local burn unit as a result of the accident. While savings and workers' compensation checks kept the friend from getting behind on his mortgage payments and losing his house, it was a close call. Less-prepared borrowers facing the same crisis could very well end up in the street.

"Because of savings and disability insurance, it made up the gap," McReynolds. "But I know it was a financial strain. Had he not done the other things, it would have been tragic.

"You don't have to get electrocuted to run into that difficulty either," he adds. "It could have been his mother going into a nursing home."

If you're on the financial fringe

People close to the financial edge should therefore take the 30-year loan and make extra payments whenever possible. After all, nothing prevents a borrower from paying a long-term loan like it's a short-term one.

"Take the 30-year. Establish your payments accordingly," says Randolph J. Shine, a certified financial planner with Shine Financial Inc. in Deerfield Beach, Fla. "Then if you wish and can afford it, I then would advise making principal-only payments of 'X' amount in essence to duplicate the 15-year loan."

At the same time, borrowers choosing between the two loans need to do a gut check. People who have the discipline to take the money they save because of the lower 30-year payments and sock it away should go with the long-term mortgage. That way, they'll have cash for big-ticket purchases and can avoid using credit cards or taking out large auto loans down the road. But consumers who will just spend any monthly savings should probably take the shorter-term mortgage.

"There are people who unless you put a stick in their back, they're not going to do what's right," Shine says "If your personality is the type that needs that discipline, then it's a no-brainer. Go for the 15."

Taxes not a factor

One thing to watch out for is lenders or brokers who push the 30-year loan aggressively because of tax reasons. While it's true a 30-year borrower will generally get larger tax deductions than a 15-year borrower, that's because the 30-year customer pays more tax-deductible interest in the first place.

"I have it written literally in stone in my office: 'Never let the tax tail wag the dog,'" says Shine. "If you're buying a house for the write-off, you're buying it for the wrong reason. The tax considerations are an afterthought.

"In my mind, you always take the minimum loan you can get at the lowest interest rate to minimize your long-term risk. If you lose a couple bucks in the write-off, fine."

Regardless of other considerations, planners say the most important thing to remember is not to tie up too much money in the home. Borrowers who choose 15-year loans should make sure they can still afford to save some money in an IRA, 401(k) plan or college savings account.

"They should have a regular funding plan for their financial goals," McReynolds says. "If it's a goal to fund their child's education and they're doing that on a regular basis and what they're doing for their retirement is on track or whatever their other financial goals are -- and they have adequate cash reserves -- then at that point, I think it's just a matter of personal preferences.

"You can afford to be debt free."