15-Year vs. 30-Year Mortgage Calculator
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Understanding the 15-Year vs. 30-Year Mortgage Trade-off
Choosing the right mortgage term is one of the most significant financial decisions a homebuyer will make. The two most common options are the 15-year fixed-rate mortgage and the 30-year fixed-rate mortgage. Each offers a different balance between monthly payments, total interest paid over the life of the loan, and overall financial flexibility. Our calculator helps you visualize these differences.
How the Calculation Works
The monthly payment for a fixed-rate mortgage is calculated using the following formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M= Your total monthly mortgage payment (principal and interest)P= The principal loan amount (the amount you borrow)i= Your monthly interest rate (your annual interest rate divided by 12)n= The total number of payments over the loan's lifetime (loan term in years multiplied by 12)
Our calculator applies this formula for both a 15-year and a 30-year term, using your provided loan amount and annual interest rate. It then calculates the total interest paid for each scenario.
Key Differences and Considerations:
15-Year Mortgage:
- Higher Monthly Payments: Because you're paying off the loan in half the time, your principal and interest payments will be significantly higher each month.
- Lower Total Interest Paid: The biggest advantage of a 15-year mortgage is the substantial savings on interest over the life of the loan. You build equity faster.
- Faster Equity Building: You own your home outright much sooner, which can be appealing for financial security and future borrowing needs (like a home equity loan).
- Potentially Lower Interest Rate: Lenders sometimes offer slightly lower interest rates on 15-year mortgages compared to 30-year loans, further enhancing savings.
30-Year Mortgage:
- Lower Monthly Payments: The extended loan term means lower principal and interest payments, making homeownership more accessible and providing more monthly cash flow flexibility.
- Higher Total Interest Paid: You'll pay considerably more in interest over the life of the loan compared to a 15-year term, assuming the same interest rate.
- Slower Equity Building: It takes longer to build up significant equity in your home.
- Financial Flexibility: The lower monthly payment can free up funds for other investments, emergencies, or lifestyle expenses.
Which is Right for You?
The choice depends on your financial situation and goals:
- Choose the 15-Year Mortgage if: You can comfortably afford the higher monthly payments, want to save significantly on interest, plan to stay in your home long-term, and prioritize building equity quickly.
- Choose the 30-Year Mortgage if: You need lower monthly payments to afford the home or maintain financial flexibility, want more cash flow for other investments or expenses, or are unsure about your long-term housing plans. You can also opt to make extra payments on a 30-year mortgage to pay it down faster and save on interest, offering the best of both worlds.
Use this calculator to compare scenarios and make an informed decision that aligns with your financial strategy.
Please enter valid numbers for loan amount and interest rate.
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var mortgage15 = calculateMortgage(principal, annualRate, 15);
var mortgage30 = calculateMortgage(principal, annualRate, 30);
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Comparison Summary
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30-Year Mortgage:
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Key Differences:
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