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15 Year VS 30 Year Mortgage

By on Feb 24, 2010 in Debt, Mortgage | 2 comments

I hope you are sitting down because this is one of the most shocking things that I have ever learned. Believe it or not their is significant difference between a 15 year conventional and a 30 year conventional mortgage. Let’s look at an example. According to HousingTracker.net, the median home price in Arizona is $175,000. For our purposes, we will use this as the actual loan amount. According to bankrate.com the national average for a 30 year is 5.09%. At the end of 30 years you will end up paying $341,671.35 (Click here to see for yourself).

If you were to do a 15 year mortgage instead, you would get it for a lower interest rate, which currently the average is 4.51%. After 15 years you would pay a total of $241,133.91.


A 30 year conventional mortgage will cost you significantly more than a 15 year and in this example it is a difference of $100,537.44! I don’t know about you, but there is a lot I could do with 100 g’s.

You may ask, why would anyone get a 30 year then? The reason is that the monthly payment is higher for a 15 year, however, if you buy a house you can afford then this won’t even be an issue. In fact, you will come out smelling like roses in the long run.


  1. Deacon,

    I like what you have to say here. Are you basically saying that at a given dollar amount, if a homebuyer needs a 30-year mortgage instead of a 15-year because they simply can’t handle the payment on the 15-year, then they shouldn’t be buying a house at that price point?

    Mark L.

    March 10, 2010

    • Mr. Larsen,

      That is correct. I would recommend having a 15 year mortgage that is no more than 25% of your take home pay. For example, if you make $4000 a month after taxes, your monthly payment should be no more than $1000 a month.


      March 10, 2010

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