How does a 30-year mortgage compare to other amortization periods?
The biggest difference between a 30-year mortgage and shorter amortization periods – like 25- or 15- years – is the amount of interest you’ll pay over the life of the mortgage. Depending on your interest rate, you could end up paying close to your initial principal in interest alone.
On a 30-year $200,000 mortgage at a 3% APR, you might pay a low payment of roughly $841.21 per month. But your total interest paid by the end of the mortgage would be approximately $102,833.90.
The same mortgage amount and interest rate on a 15-year amortization period would result in a total of approximately $48,287.82 interest, but with higher monthly payments of $1,379.38.
For a $200,000 mortgage …
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 | – |