How does a 20-year mortgage rate compare to 25- and 15-year mortgages?
A 20-year mortgage is paid off in 20 years and is generally seen as the middle road, with many borrowers opting for a 25- or 15-year mortgage. It’s not as popular, but it does have its perks: you’re not saddled with the high monthly payments that come with a 15-year mortgage and you can avoid paying thousands more in interest than you would with a 25-year mortgage.
For a $200,000 mortgage at a fixed interest rate of 3%, you’d pay…
Let’s crunch the numbers. Say you’re looking at a $200,000 20-year fixed-rate mortgage with an interest rate of 3%. You’ll pay roughly $1,107.34 per month and cough up a total of $65,760.62 in interest.
Compare this with a 25-year fixed-rate mortgage at 3%: you’ll pay approximately $946.49 each month and a whopping $83,947.30 in interest over the life of the mortgage – although it’s just five years longer, you’ll pay a staggering $18,186.68 more in interest. For many borrowers, the amount they save in interest is worth the slightly higher monthly payments — and they get to own their home five years earlier.
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