15-year vs 30-year mortgage.
In plain English
A 15-year and a 30-year mortgage are the two most common repayment lengths. The 30-year spreads the loan over twice as long, so the monthly payment is lower and easier to fit in a budget, but you pay interest for far longer and usually at a slightly higher rate. The 15-year has a higher monthly payment because you are repaying the balance twice as fast, but you pay dramatically less total interest and own the home outright much sooner. The standard framing is a tradeoff between monthly cash flow and lifetime cost.
01Why it matters
The term you pick changes both your monthly payment and the total interest by a large amount, so it is one of the most consequential numbers in the whole loan.
02The math, step by step
On a 300,000 dollar loan at about 6 percent, a 30-year charges roughly 348,000 dollars in interest over its life; a 15-year at a slightly lower rate charges roughly 156,000 dollars, about 192,000 dollars less, for a higher monthly payment.
03What this is NOT
A 15-year is NOT automatically better. It saves interest but demands a much higher payment; whether the tradeoff fits depends on the budget, not on the interest saved alone.
04Receipts
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