30-year mortgage
A mortgage paid off over 30 years. Payments are lower than shorter loans but total interest is much higher. The default choice for most U.S. buyers.
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Part 1 of 4
Why a seller cares
Most buyers use one, and most sellers are paying one off. Its slow early amortization is why a seller a few years in still owes nearly the whole loan, and why the payoff surprises people.
Part 2 of 4
A simple example
A $240,000 30-year loan at 6.5%. After five years the balance is still about $224,000, though the buyer has paid about $91,000.
| After five years | Where the money went |
|---|---|
| Payments made | About $91,000 |
| Principal paid | About $16,000 |
| Interest paid | About $75,000 |
Thirty years keeps the payment low by front-loading the interest.
Part 3 of 4
What people get wrong
That a low payment means the loan is cheap. It means the loan is long, and long is expensive.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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