"Dave Ramsey has built a personal finance empire on clear, uncompromising rules. Among his most emphatic: "A 15-year fixed-rate conventional mortgage is the only loan we recommend because it saves tens of thousands in interest and eliminates debt faster." The statement appears across his books, radio show, and website as the singular path to homeownership without regret. The advice resonates because it's simple and morally framed."
"The mathematics behind Ramsey's preference center on compound interest. Consider a $300,000 mortgage: the 15-year option at 5.5% costs $139,000 in total interest, while the 30-year version at 6.5% costs $178,000. That $39,000 difference comes from two factors working together - lenders offer better rates for shorter commitments, and less time means interest compounds against you for fewer years."
A 15-year fixed-rate mortgage delivers lower total interest costs and faster equity accumulation compared with a 30-year loan, driven by lower rates for shorter terms and reduced compounding time. A $300,000 example shows $139,000 in total interest for 15 years at 5.5% versus $178,000 for 30 years at 6.5%, a $39,000 gap. Fixed rates provide payment certainty during volatile markets, while adjustable-rate borrowers face fluctuating payments when benchmarks move. The 15-year option suits disciplined earners with stable income or buyers refinancing with equity. The main downside is significantly higher monthly payments that can price many buyers out and reduce financial flexibility.
Read at 24/7 Wall St.
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