A 15-year fixed mortgage costs more each month than a 30-year one but typically carries a lower rate and roughly half the total interest. Enter the home price and the 15-year rate you were quoted to see the full monthly payment, then switch the term to 30 to compare what the shorter loan really costs you per month and saves you overall.
When to use this
A 15-year term suits buyers with steady income who can absorb a higher payment, people refinancing midway through a 30-year loan without restarting the clock, and anyone who wants the house paid off before retirement or before children reach college.
Frequently Asked Questions
How much more is a 15-year payment than a 30-year one?
Usually 40-50% more. On a $320,000 loan at 6.5%, principal and interest is about $2,023 a month over 30 years and $2,788 over 15. The 15-year loan's lower rate in practice narrows that gap a little.
How much interest does a 15-year mortgage save?
On the same $320,000 loan at 6.5%, about $182,000 of interest over 15 years against about $408,000 over 30 - more than $225,000 saved, before counting the lower rate 15-year loans usually get.
Can I get the same result with a 30-year loan?
Partly. Paying a 30-year loan as if it were a 15-year one pays it off on the same schedule, while keeping the lower required payment as a safety net. You lose the 15-year loan's lower rate, so it costs somewhat more interest.
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