Calculating the Difference in Mortgage Interest

Written by: Mike Valles

If you are considering getting a 30-year mortgage, or already have one, and want to find out how it compares to a 15-year loan, taking the time to calculate the difference in mortgage interest may save you many thousands of dollars. It is not difficult to do, and it will be worth it to look at the numbers – and you may be surprised at the difference.

30-Year Mortgages Typically Have Higher Interest Rates

There is no doubt that a 30-year mortgage will nearly always have a higher interest rate than a 15-year mortgage. The advantage of getting a lower payment with a 30-year mortgage, which may be hundreds of dollars less, is often the selling factor that enables many people to buy a larger home.

Save Tens of Thousands of Dollars with a 15-year Mortgage

In an article by Rob Berger at, he mentions that if you had a $250,000 30-year mortgage at 5 percent interest, you would be paying about $1,350 monthly, not including either taxes or insurance. If you refinance, however, and get a 15-year mortgage at 2.63 percent, he says, your payment would be about $1,680. For an increase of $330 per month, the interest you would save – when compared to the 30-year mortgage – is $178,000! This shows you why paying a little more each month will certainly make it worth your effort.

Using Mortgage Loan Calculators

Most lenders have a mortgage loan calculator on their website, which will enable you to quickly calculate the difference in the cost of 15-year versus a 30-year mortgage. has a simple mortgage calculator that will compare them at the same time.

Tips for Getting a 30-Year Mortgage

If you feel that you need to get a 30-year mortgage, says, then you want to be sure to try and get as low of an interest rate as you can. He also mentions that you might take the difference in the monthly payment between a 15-year and a 30-year mortgage and invest it. This will only be valuable, however, if the interest rate on your investment is considerably higher than the interest rate you are paying on your mortgage. Your best deal, though, will certainly be the 15-year mortgage.

An Alternative Plan

Another way that you could save money is to take advantage of both plans. says this is possible if you get a 30-year mortgage and then make extra payments when you want to. This way you are not obligated to the much higher monthly payments, and you have the convenience of paying when you are able. Although you will pay more in interest (even if you do pay it off within 15 years), the added convenience of lower payments plus paying when you want, could be the ideal situation for you.

Another article at also says the same thing as NASDAQ. In fact, they mention that by paying extra, you could pay off the 30-year mortgage in 15 years. It really is up to you. However, a potential problem with getting a 15-year mortgage is that if you were to be laid off or disabled, it would be a lot harder to come up with the much larger payment.

Having a good credit score will go a long way toward helping you pay less interest over the life of any mortgage. Shopping around will also help you decide which lender to choose from that will best meet your needs.


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Calculating the Difference in Mortgage Interest

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