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.
Mortgage term | Monthly Payment | Total Interest Paid | Savings |
---|---|---|---|
10 years | $1,929.50 | $31,540.01 | $16,747.81 |
15 years | $1,379.38 | $48,287.82 | $17,472.80 |
20 years | $1,107.34 | $65,760.62 | $18,186.68 |
25 years | $946.49 | $83,947.30 | $18,886.60 |
30 years | $841.21 | $102,833.90 | $19,569.88 |
35 years | $767.63 | $122,403.78 | – |