Mortgage Payment Calculator: 15 vs 30 Years

Nov 18, 2023 By Susan Kelly

Trying to decide between a 15-year and 30-year fixed-rate mortgage? You may let this calculator figure it out for you. It calculates the costs of both a 15-year and 30-year fixed-rate mortgage simultaneously and displays the findings.

Find the best mortgage loan by balancing the monthly payments against the overall interest charges. The calculator also factors in tax information, allowing you to understand how the mortgage interest deduction differential between the two loan types would affect your overall expenses and savings.

Mortgage Comparison: 15-Year vs 30-Year

Both 15- and 30-year fixed-rate mortgages are prevalent. Each form of mortgage has advantages and disadvantages, so it's up to the borrower to weigh them and make the best choice for their unique financial circumstances.

The loan term for a 15-year fixed-rate mortgage is cut in half, but the monthly payments are double what they would be for a 30-year mortgage. The monthly payment on a 30-year fixed-rate mortgage may be lower, but you will spend more on interest and pay for the loan over a more extended period.

Employing a Mortgage Cost Estimator

Put in the loan amount and your effective tax rate to begin. Use the table at the bottom of the page to determine your marginal tax rate if you're unsure. It's essential to calculate your rate based on your taxable income, not your gross income.

Choosing Between a 15- and 30-Year Mortgage

Two times as long to pay off your debt with a 30-year mortgage compared to a 15-year mortgage, which is half the length. But it's not relatively that easy; understanding the numbers behind various loan options may light up factors like monthly outlays, total interest paid, and rate of home equity growth.

Repercussions of Amortization

Debt paid off gradually with regular payments is said to be "amortized" in the accounting world. This factor determines the extent to which each monthly payment goes toward paying off debt vs accruing interest.

Initially, interest will consume a sizable portion of your regular monthly price. In time, the central part will become more prominent, to the point where it will account for close to 100% of your payment.

The monthly payments on a 15-year mortgage are determined by the interest rate the lender offers and is entered into a 15-year mortgage rates calculator. The interest you owe each month is computed by dividing your annual interest rate by 12 to get your monthly rate, which is then multiplied by the unpaid principal balance.

15-Year Mortgages

Get a 15-year fixed-rate mortgage if you want the best possible interest rate. Rates for 15-year loans averaged 2.86% as of June 22, 2020. Now is a fantastic time to buy a house or refinance your mortgage because rates are approaching historic lows.

A 15-year mortgage often has a lower interest rate than other loan terms. Data from Freddie Mac's mortgage market shows that 15-year loans typically have a lower interest rate than 30-year loans. A lower interest rate on a loan will save you money throughout the loan.

Options for 30-Year Mortgages

The 30-year conventional mortgage has long been the standard for Americans looking to buy a home. In exchange for a smaller regular payment, you'll pay a lot more interest on this mortgage plan over its whole term. As of June 22, 2020, the average interest rate for a 30-year mortgage is 3.40%, somewhat higher than the average interest rate for a 15-year loan at 3.30%.

If you take out a 30-year loan, it will take you considerably longer to accomplish specific goals. A sizeable monthly payment will go toward interest for the first several years, making it more challenging to create equity.

Is It Best To Have A 15-Year Mortgage?

For most people, the most practical mortgage term is 15 years. The interest you save might amount to tens of thousands of dollars, and you'll have more money for home improvements and other expenses.

A few more options make a 30-year loan more appealing to you. First, more freedom in your monthly budget results from a reduced payment. A longer loan repayment time means higher disposable income each month for other purposes, whether savings, investments or simple living expenses.

The Conclusion

The decision between a 15- and a 30-year mortgage is complex and very individual. It's up to you to decide if you'd rather pay a slightly higher interest rate each month or a much more considerable total amount throughout the life of your loan. Compare the monthly payments for a 15-year mortgage to those of a 30-year mortgage to get a better idea of how much property you can afford with each loan period.

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