15-Year Mortgage vs. 30-Year Mortgage — Summit of Coin (2024)

FAQs

Is it better to get a 15 year mortgage or pay off a 30-year mortgage in 15 years? ›

A 15-year mortgage costs less in the long run since the total interest payments are less than a 30-year mortgage. The cost of a mortgage is calculated based on an annual interest rate, and since you're borrowing the money for half as long, the total interest paid will likely be half of what you'd pay over 30 years.

Combined with the long repayment term, interest rate charges are higher on a 30-year mortgage than a 15-year one. This means you'll end up paying more over the life of the loan than you would for a 15-year mortgage with the same interest rate.

Which is better: 15- or 30-year loan term? In this tool, the results display before the inputs. The 15 year loan will cost you $238 more monthly and save you $34,790 in total interest compared to the 20 year loan.

The biggest drawback to a 15-year mortgage is the higher monthly payment, which means you have less money available to save for financial goals such as retirement or a child's college education. The higher payment can also limit how much house you can afford.

A: Dave Ramsey recommends a 15-year, fixed-rate conventional loan.

A 15-year mortgage means larger monthly payments, but a lower rate and substantial savings on interest. A 30-year mortgage gives you a more affordable monthly payment, but expect higher borrowing costs overall. You can also take out an interest-only mortgage or pay your loan off early to maximize interest savings.

People with a 15-year term pay more per month than those with a 30-year term. In exchange, they are given a lower interest rate and will pay their loan off faster. Borrowers with a 15-year term pay their debt in half the time and possibly save thousands of dollars over the life of their mortgage.

Choosing a 25-year term will be cheaper in the long run, but make sure you can afford the higher monthly payments. If a shorter term makes repayments too expensive, consider the longer 30-year term.

Pros of a 15-year mortgage include paying less in interest over the life of the loan as a result of a lower rate and shorter term, and paying off your mortgage sooner. On the downside, the monthly payments on a 15-year mortgage will be higher due to the shorter repayment schedule.

If your lender offered you a 7% annual percentage rate (APR) on a 15-year loan for $100,000, you could expect your monthly payment — principal and interest — to be about $898. If you had a 30-year loan with a 7% APR, a $100,000 mortgage payment could be about $665 per month.

How much is a 15-year mortgage on 200k? ›

Monthly payments on a $200,000 mortgage

At a 7.00% fixed interest rate, your monthly payment on a 30-year $200,0000 mortgage might total $1,331 a month, while a 15-year might cost $1,798 a month.

The 30-year fixed mortgage rate is expected to fall to the mid-6% range through the end of 2024, potentially dipping into high-5% territory by the end of 2025.

But if you're not sitting on a mountain of money, Ramsey Solutions says the only home loan you should consider is a conventional, fixed-rate mortgage with a 15-year (or less) term. Your monthly mortgage payment also shouldn't exceed 25% of your take home pay.

The Equal Credit Opportunity Act ensures mortgage lenders can't deny a requested loan term based on age. This protection allows you to select a mortgage loan term that suits your financial needs and goals.

The upshot is that if you're over the age of 62, you're almost 30% more likely to get rejected for a standard mortgage.

There are benefits to paying off your mortgage sooner rather than later. When you pay off your mortgage faster you can: Save money: Paying off your mortgage faster can help you pay less in interest over the life of the mortgage. It also frees up money in your budget for other financial priorities.

The typical mortgage lasts 15 to 30 years. That's a long time to be saddled with loan payments. By paying off your mortgage early, you'll free up cash to spend on more exciting things when you're a bit older, such as travel. Increase home equity.