Fiancées parents are selling us the house she is living in, need mortgage advice

My fiancée lives in a town house that Zillow values around $260k, it’s not our ideal place, but it’s a great option for now until we can find something we really want.

As opposed to paying for our wedding, her parents are selling us the house at the price they bought it at ($213k) and giving us full equity in it (her grandparents gave her parents money to buy it outright in cash). It was either this or they help cover the wedding, we obviously determined this was the better long term solution and also very generous.

Now, we’re looking at mortgage options and aren’t quite sure with what to go with. Because we’re getting the equity of the house as a gift, the down payment is covered and we’re only doing the minimum 3% that the credit union required. Unfortunately, interest rates are back up, our best options are (from shopping around):

– 30 year at 6.755% (total paid over 30 years is $478,458)
– 20 year at 6.544% (total paid is $375,194)
– 15 year at 6.209% (total paid is $316,147)

I know typically people recommend to do a 30 year as it gives more flexibility, but is that still the case with these higher rates? Would it not be more beneficial to go with the 15 year and pay it off earlier?

I suppose our likely best options are:

– 30 year and pay it off as if we have a 15 year mortgage instead, if life happens then drop to the 30 year payment
– 30 year and pay it off at the 30 year rate, invest the monthly payment difference (~$400)
– 15 year and it pay it off a the 15 year rate, paying more when we can