QuietCalcsThe trade-off, in one line
A 15-year mortgage costs more each month but carries a lower rate and clears far less interest — and it forces you to build equity fast. A 30-year costs less each month, so it frees up cash you could invest, but you pay a lot more interest over the life of the loan. Which wins depends on the rate gap between the two and what you'd actually earn investing.
The plain numbers
On a $320,000 loan at 5.75% for 15 years versus 6.5% for 30, the 15-year payment is about $2,657 against roughly $2,023 for the 30-year — about $635 more a month. But the 15-year pays around $158,000 in total interest versus about $408,000 for the 30-year: a quarter-million dollars saved, guaranteed, just from the shorter term and lower rate.
The deeper question: invest the difference?
The usual argument for the 30-year is "take the lower payment and invest the $635 difference." To test it fairly, this calculator gives both choices the same monthly budget — the bigger 15-year payment — over a full 30 years:
- 30-year path: pay the smaller payment and invest the difference every month, for 30 years.
- 15-year path: clear the loan in 15 years, then invest that entire large payment for the last 15.
The house is paid off by year 30 either way, so the winner is simply whichever investing pot ends up larger. The catch most people miss: the 15-year path ends up investing far more money overall (a big payment for 15 years beats a small difference for 30), so it often wins — unless your investment return is high enough that the 30-year's early, longer-compounding contributions pull ahead. Push the return up and watch the verdict flip.
What this assumes
Both paths spend the same each month and own the home free at year 30, so the comparison is apples-to-apples. It leaves out taxes on investment gains (which trim the investing side) and the mortgage-interest deduction (which slightly helps whichever loan charges more interest). And it assumes you actually invest the freed-up cash every month — the 15-year's saving is automatic and guaranteed, while the 30-year-plus-investing plan only works if you have the discipline to follow it. See the mortgage payoff calculator to model extra payments on whichever term you pick, or rent vs buy if you haven't bought yet.