With so many different loan options out there it can be confusing as to which option to go with and which one will save you the most money. This post will focus on weighing the pros and cons of a 15-year and 30-year mortgage. We’re here to help you through this huge decision!

A survey found that 86% of home loan applicants opt for a 30-year mortgage. Your monthly payments will be smaller over 30 years than 15 years, its pretty simple but how much money can you save if you opt to go with a 15 year loan.

If you purchase a $300,000 home with a 20% down payment, a 30-year loan it will cost you an estimated $1,112(Principle/Interest) per month for 30 years. Get that same loan for 15 years, you’ll be rewarded with a slightly lower interest rate but you’ll have to cough up $1,655—$500 more per month. Long story short, if you can’t afford the larger monthly payment or are worried about not being able to in the future due to job loss or foresee an income change, student loans, etc. Its smarter to go with the 30 year loan.

Good and Bad of a 15-year mortgage

What many homeowners forget to factor in is that a 15-year mortgage may cost more now, but it will save you major cash in interest payments in the long run

Lets go back to the example above: For a $300,000 home purchased with a 20% down payment, a 30-year mortgage at today’s average interest rate will end up costing you a total of $456,708 over the life of the loan. A 15-year loan at today’s average interest rate will cost you only $351,933.

A 15-year mortgage will end up saving you $104,775 in interest payments. A few numbers to think about that might be worth cutting back on the golf games and eating out.

Saving money on a 30-year mortgage

If you can’t afford making the higher payments on a 15-year mortgage but like the idea of saving so money on a consistent basis here are a few tips.

For one, we won’t stop you or penalize you for paying your loan off early, so there’s no reason you can’t pay off a 30-year loan in just 15 years or less with a little work. We strongly suggest that if you do have extra income coming in due to a bonus or tax refund, consider putting it toward your the principle on your mortgage. You will save a considerable amount in interest without sacrificing the sense of security that comes with knowing you can easily afford to make your monthly mortgage payments.

Contact one of our loan officers to get a FREE quote and to see if going with a 15 year loan or a 30 year loan is the best option for you.

Beam Lending Corp. NMLS #1104582  Equal Housing Lender

Photo Copyright: ponsulak / 123RF Stock Photo

Clint Carver
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Clint Carver

Loan Officer at Beam Lending
Clint graduated from the University of Utah with a degree in English. His prior experience includes 10+ years working under the direction of an Architect. When not helping families and individuals through the home buying process he can be found golfing and spending time with his family. Licensed in Utah and Wyoming. NMLS#826251
Clint Carver
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