The Crazy Amount of Interest Paid on a 30 Year Mortgage

If you’ve ever had a 30-year mortgage, you may remember the feeling of opening your first bill.

We had a relatively low interest rate historically at 6% though that seems ridiculously high in this age of low interest rates.

During your first year on a 30 year fixed mortgage, nearly 70% of your mortgage payment of $477 will go to interest alone.

How Much Interest Will You Pay During the First Years of a 30 Year Mortgage?

While it feels like interest is reverse compounding when nearly 70 percent of your payments are going toward interest in year one.

Is a Mortgage Compound or Simple Interest?

A mortgage is simple interest usually calculated monthly. For example, the table below shows that interest is based on a simple balance calculation.

Over the past several years, mortgage tenure has increased from about six years to 10 years.

How Long Do People Keep Their Mortgage?

The Case for a 15 Year Fixed Mortgage

First, interest rates are usually nearly a whole percentage point lower on a 15 year fixed mortgage than a 30 year fixed mortgage (it’s been closer to .75% recently).

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