15 Year vs 30 Year Mortgage Calculator
One of the most crucial decisions you'll make when purchasing a home is choosing between 15- and 30-year mortgages. While 30-year mortgages are the more popular choice, a 15-year loan could save you thousands in interest over its life. In this article, we'll explain each option and show you how to use a mortgage calculator to decide which option is best suited for you.
What is a Mortgage Calculator?
A mortgage calculator is an online tool that estimates your monthly payments based on the amount borrowed, interest rate, and loan term. It considers factors like credit score and down payment amount to calculate an accurate estimate.
How to Calculate 15 Year and 30 Year Mortgage Payments?
Do you need help determining which loan term works best for you? Use our 15 Year vs 30 Year Mortgage Calculator for assistance.
Calculating a 15-year vs 30-year mortgage is simple. All you have to do is enter the amount to borrow and its associated interest rate. The calculator will display both options' estimated total costs and how much interest will accrue over each option's lifecycle.
Example of a 15 Year vs 30 Year Mortgage Calculator
Let's say you want to borrow $200,000 at an interest rate of 4.5%. Using a 15-year vs 30-year mortgage calculator, you will see that the estimated total cost of a 15-year loan is $357,193. The total cost of a 30-year loan is $439,922. The 15-year loan will save you over $80,000 in total interest payments.
The formula for a 15-year vs 30-year mortgage calculator is as follows:
15-Year Loan: Total Cost = Principal Amount + (Principal Amount × Interest Rate × 15 Years)
30-Year Loan: Total Cost = Principal Amount + (Principal Amount × Interest Rate × 30 Years)
For example, if you are borrowing $200,000 at an interest rate of 4.5%, the total cost of a 15-year loan would be $357,193, and the total cost of a 30-year loan would be $439,922.
Let's take an example to understand how a mortgage calculator works. Suppose you want to buy a home for $250,000 and plan to make a down payment of $50,000. You also have a credit score of 700 and plan to take out a loan with an interest rate of 4%. By entering this information into a mortgage calculator, you can see that your estimated monthly payment for a 30-year mortgage would be around $1,193, while your estimated monthly payment for a 15-year mortgage would be around $1,735.
Monthly payment: A 30-year mortgage will have lower monthly payments than a 15-year mortgage, but you'll pay more in interest over the life of the loan.
Interest rate: A 15-year mortgage typically has a lower interest rate than a 30-year mortgage, which can result in significant interest savings over the life of the loan.
Loan term: A 15-year mortgage will allow you to pay off your home more quickly and build equity faster.
Financial goals: Consider your long-term financial goals when choosing a mortgage term. If you plan to retire soon, a 15-year mortgage may be a better option to help you pay off your home before retirement.
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