Big Savings with a 15-Year Mortgage

Opting for a 15-year mortgage instead of a standard 30-year mortgage could save you thousands of dollars in interest--in addition to helping you pay off your mortgage loan more quickly.

15-Year vs. 30-Year Mortgages

The longer your mortgage, the more you can expect to pay in interest charges over the life of the loan. Thus, a 15-year mortgage offers you significant savings over the 30-year mortgage that has become the industry standard.

If, for example, you acquire a 30-year fixed-rate mortgage with a 6 percent interest rate, you’d pay $115,838 in interest charges. Over the life of the loan, you’d pay a total of $215,838. If you opted for a 15-year mortgage instead, the total amount you could expect to pay over the life of the loan would be $151,894 with $51,894 of that going to interest. Thus, a 15-year mortgage loan could save you over $60,000!

Higher Monthly Payment

The shorter your mortgage loan, the higher your monthly payment will be. This doesn’t mean, however, that your monthly payment on a 15-year mortgage loan will be double that of your payment on a 30-year mortgage loan. Using the above example with the same interest rates, your monthly payment on a 15-year mortgage would be $843.86, compared to $599.55 on a 30-year loan. If you can afford the extra amount in monthly loan payments, a 15-year mortgage is a very wise financial decision.

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