Extra payments vs. a shorter term
Scenario. A $400,000 loan. The 30-year is 6.76%; the 15-year is 6.09% — both Freddie Mac's published average for the week. In option A you take the 30-year and add roughly $600/month toward principal.
| 30-year loan, pay extra voluntarily | Commit to a 15-year loan | |
|---|---|---|
| Interest rate | 6.76% | 6.09% |
| Required monthly payment | $2,597 | $3,395 |
| Payment including the voluntary extra | $3,197 | $3,395 |
| Payoff time at that pace | 18 yr 2 mo | 15 years |
| Total interest | $294,419 | $211,083 |
| Can drop to a lower payment in a tight month? | Yes | No |
Run “30-year loan, pay extra voluntarily” → · Run “Commit to a 15-year loan” →
Rate vs. flexibility
Committing to a 15-year loan gets you a lower rate — usually half a point to a full point — which the voluntary-overpayment route cannot match. That rate edge is the 15-year's real advantage. What you give up is flexibility: the 15-year payment is mandatory, every month, regardless of what else happens that year.
Taking the 30-year and overpaying gets you a similar payoff timeline at a higher rate, but the extra is always optional. Lose your job, face a big medical bill, or want to redirect cash to a business, and you can fall back to the lower required payment without refinancing.
What the flexibility costs
The price of that option is the rate difference applied to your balance — on a $400,000 loan, often $20,000–$40,000 of extra interest over the years it takes to pay down, versus locking in the 15-year rate. Whether that is worth it depends on how stable your income is and how much you value the escape hatch.
Frequently asked questions
Is a 15-year mortgage cheaper than overpaying a 30-year?
Why not just take the 30-year and pay it like a 15-year?
Can I switch from a 30-year to a 15-year later?
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Terms: Amortization , Principal , Interest , Fixed-rate mortgage , Prepayment penalty