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15 vs 30 year mortgage – How fast can you pay off your home loan?

15 vs 30 year mortgage
15 vs 30 year mortgage

15 vs 30 year mortgage

In the not-so-distant past, our grandparents could buy a nice home in a safe neighborhood for under $5k ($47k adjusted for inflation since 1950). With some self-control, hard work and a little luck, they might pay cash at closing. If not, the local bank would give them a 5–7-year balloon loan with an option to refinance the balance at the end of the term if needed.

The plan was to pay off the loan fast and the house they chose was affordable. Back then, folks tried to live within their means and avoid debt whenever possible. Things have changed since those ‘good old days’, and not just inflated currency.

Like a moth to the flame, in flew the United States government to save us from that dreaded balanced budget. Behemoth agencies like Fannie Mae and Freddie Mac began to offer 30-year mortgages and conveniently pocketed the interest. Like president Ronald Reagan said, “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’”

For decades home prices, inflation and greed went through the roof and now the average cost of a home in Denver, CO is over $600,000. The lifetime interest on that nut with a 30-year loan at 7% is a whopping $837,000. There’s one word for this sad story, “usury”. 

What can we do? Do we keep playing this game of never-ending debt and unaffordable housing created by blood sucking banks and our corrupt government? Like the proverbial frog in hot water, it may be too late to reverse the damage done but the next best thing, in my opinion, is the 15-year fixed loan. 15 vs 30 year mortgage. 

The same $600,000 home loan at 7% on a 15-year fixed mortgage will cost you $370k over the life of the loan, a savings of $467,000. Just for reference, a 10 yr. fixed costs $236k in total interest, a savings of $600k compared to the 30 yr. loan.

What is financial freedom worth? How fast could you pay off that mortgage if you gave up a few things? Could you drive a 1995 Civic with 250k miles instead of that Tesla? Do you really need all those streaming services, daily DoorDash and the newest iPhone? Have you ever met someone who skipped the Las Vegas vacations, passed on giant TVs, Starbucks, the latest fashions, that stupid tent on top of your SUV, cut up the credit cards and paid off their mortgage before age 35? I have…and it was quite inspiring.

The truth today is a very unpopular subject. Living a disciplined, balanced life within your means might cost you friends or social status, but what does it say about you? Are you a leader or a follower? Is it even realistic to try and swim upstream?

The culture offers no wisdom but rather bondage. Now everyone is a victim with a good excuse to fail. Debt and excess are just the norm. Do you really want what they have? What would your life look like in 15 years with no mortgage?

The interest rate is lower on a 15 vs 30 year mortgage, and because the term is half as long, a borrower pays less interest over the life of the loan. This also means the payment will be higher than with a
30-year mortgage. 

You will keep the same interest rate for the life of the loan. You will also have the same monthly payment during the term of the mortgage.  Fixed-rate Mortgage Loans | Par 4 Mortgage Lenders

Send me an email and let’s work through the numbers on a 15 vs 30 year mortgage. How fast can you pay off that home loan? Let’s find out together.  Call 720-397-0056 email loans@par4mortgage.com