Mortgage Basics
A calculator a house and a $1 bill in the background
Fixed-rate mortgages


Say you have a $150,000 mortgage. Let's compare how much money you would pay in interest over 30 years vs. 15 years. The following chart shows the numbers. The monthly loan payments are principal and interest only. As you can see, with a 15-year loan you would save $117,001 in interest.

Interest cost: 30-year vs. 15 year mortgages
Loan termRateMonthly
30 years6.64%$961$196,304
15 years6.10%$1,274$79,304
Interest difference$117,001

Other factors to consider

Take the example above: With the 15-year loan, the monthly mortgage payment is $313 more than the 30-year mortgage. You may want to put that money toward another investment. For instance, in a bull-market economy, you can make more money investing that $313 monthly in mutual funds or other investment securities.

Keep in mind that there are ways to prepay your mortgage and whittle away at the principal each month so that the loan is paid off sooner than 30 years.

Also, it depends on how long you plan to own the home you are purchasing. If it's less than five years, you may be better off with an adjustable-rate mortgage, or ARM.

Compare the rates

To find out what the mortgage principal and interest would be on a particular loan you may be considering, use Bankrate's tools to find the best rates in your area, then proceed to our mortgage calculator.

Another helpful source of information, Your Best Interest Report, the latest survey of interest rates on 30-year fixed mortgages and 15-year fixed mortgages.


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