A half-point rate cut vs a 15-year term on $350,000
Same principal, three notes. Monthly cash versus lifetime interest, priced with the mortgage tool.
Shopping a mortgage, people mix two different trades: a lower rate on the same term, and a shorter term at the same rate. Both cut interest. Only one usually cuts the monthly draft. This page prices three notes on $350,000 using the same amortizing formula as the mortgage calculator. No extra-principal field. No refinance closing costs. Just P, r, and n.
Note A: 6.5%, 30 years
Monthly principal and interest is $2,212.24. Three hundred sixty payments. Total paid $796,406.40. Interest $446,406.40 if you never send extra and never refinance. That interest pile is larger than the amount you borrowed. That is normal on a 30-year note at this rate. It is not a scam. It is the formula.
Note B: 5.75%, 30 years
A half-point cut, same term. Monthly $2,042.50. Total paid $735,300.00. Interest $385,300.00. Versus note A you save $169.74 every month and $61,106.40 of interest over the full term. Cash flow got easier. Lifetime interest got smaller. That is why people refinance a rate when the new note, after fees, still wins.
This site does not subtract points, origination, or title. A refinance that costs $8,000 in cash has to be judged against those $61,106 of interest and those $169.74 months. If you sell in three years, you may not keep the loan long enough for the interest pile to matter. The monthly cut still hits every draft you actually make.
Note C: 6.5%, 15 years
Same rate as A, half the years. Monthly $3,048.88. One hundred eighty payments. Total paid $548,798.40. Interest $198,798.40. Versus note A you pay $836.64 more every month and save $247,608.00 of interest if you keep the 15-year note to the end. Cash flow got harder. Lifetime interest got much smaller. You cannot skip a 15-year contractual payment the way you can skip an extra principal draft on a 30-year note.
Which trade you are making
Rate cut on the same term: smaller month, smaller interest. Shorter term at the same rate: larger month, much smaller interest. People who “want to pay it off faster” sometimes refinance to 15 years when extra principal on the 30-year note would have been enough and reversible. This calculator will not send extra principal. If you want that story, take note A’s $2,212.24, add what you would have sent extra, and compare that sum to note C’s $3,048.88. If the sum is close to $3,048.88, you were already buying a 15-year cash-flow with optional brakes.
None of these numbers is PITI. County tax and insurance still sit on top. A cheaper rate in a high-tax county can draft more than a higher rate in a cheap-tax town. Add those bills yourself. Then compare the sum to take-home on the paycheck or 1099 page.
We are not a lender. There is no application. Type 350000, 6.5, 30 on the mortgage calculator, then 5.75 and 30, then 6.5 and 15. You should match this article. The Loan Estimate still wins at closing. Closing costs are not in any of the three notes above.
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