A 15-year mortgage can save a considerable sum in interest payments compared to a 30-year mortgage due to the shorter time frame for interest to accrue, resulting in substantial overall savings.
A 15-year mortgage can indeed save you a significant amount of money in interest compared to a 30-year mortgage. The key factor here is the amount of time interest is accruing. For a 30-year mortgage, interest accrues for an additional 15 years, which can add up to hundreds of thousands of dollars depending on the loan amount and interest rate. Making higher payments for a shorter term with a 15-year mortgage means less time for interest to compound, thus resulting in substantial savings over the life of the loan.
Using an online calculator to analyze pros and cons of a 15 or 30 year mortgage can illustrate these differences. The calculator may show that while monthly payments are higher for a 15-year mortgage, the overall interest paid is significantly lower.