# 15 Year vs 30 Year Mortgage Calculator

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## 15 vs 30 Year Mortgage – Which Of Them is Better?

The main thing to ask yourself is whether or not you should get a 15-year mortgage or a 30-year mortgage. This section consists of the advantages and disadvantages of each so you can make a clear decision.Looking for a new home is really exciting. You get to explore many areas to see what’s the best fit for you. Are you looking for a mortgage? This is the part that’s not as fun.Even though it can be a daunting task, it’s necessary to do if you want the best deal on a mortgage. You’ll have plenty of options to choose from as you are shopping around. Here are some of the first steps: choose your lender, decide on your down payment, and choose if you’re going to buy points or not. In addition to, the biggest decision you’re going to make deciding the length of your mortgage term.The mortgage term is how long you’re going to make monthly payments apart from making extra payments. Even though lenders offer various loan terms, the most common are the 15 and 30-year loan terms.Some people (or those who’s interested in refinancing) look at the interest rate of a 15-year loan and think that’s the better option. I mean, who wouldn’t want to pay their loan in 15 years or less?Overall, when people see that big number they have to pay, they say, “Ah, this may not be a good idea.”Determining which mortgage term is right for you can be a challenge.With a shorter 15 year mortgage, you will pay significantly less interest than a 30-year mortgage – but only if you can afford the higher monthly payment. Use this calculator for a comparison of a 15 vs. 30-year mortgage.

### When is 30-Year Fixed-Rate a Good Idea?

The main reason why people choose a 30-year term is that they have low, monthly payments. It’s because you’ll be paying back the loan over a long period of time, even 30 years if you choose to do so.Here’s a good example: Let’s say you have a 30-year, fixed rate loan amount of \$200,000 with a 4.75 percent interest rate. Your monthly payments come out to \$1,043 per month that doesn’t include insurance or taxes.On the flip side, let’s say you have a 15-year mortgage and you borrow \$200,000 with a 3.82 percent interest rate in the form of a 15-year fixed-rate loan. Your payment comes out to \$1,461, not including insurance or taxes. Overall, you’ll have a higher payment amount to pay for 15 years instead of 30 years.

### When is 15-Year Mortgage Makes Sense?

What a lot of people don’t realize is that a 15-year term saves them money in the long run, even though you pay more monthly.It’s very surprising to see exactly how much, so let’s continue the example above. If you purchase a home for \$200,000, a mortgage at 30 years at today’s average interest rate is (4.75%) will cost a total of \$375,588, which consist of the interest in principle, by the time the 30 years are up. On the contrary, a 15-year loan term at today’s interest rate of 3.82% will cost you only \$263,052.Overall, a mortgage that’s 15 years will save you \$112,536 in interest payments which is a great reason to be more intentional with finances to give this option a try. Another thing to consider is your job situation. If you have a good job and know without a shadow of a doubt that you’re not going to leave it, a 15-year mortgage plan is the better option for you.Also, it’s important to consider if you surprisingly lose your job and not being able to make your payments. What would you do? You definitely wouldn’t qualify for a loan refinance. This is quite the pickle if this situation ever arise.In addition to, another thing is to consider is the financial impact of having a higher mortgage. Paying down your mortgage at a fast rate may seem like a good thing on the surface. For instance, if you need to start an education fund for your kids, that may not be the best option.