15 year mortgage vs 30 year mortgage vs retirement: my $100,000 mistake

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by ya_yea_yeah

A couple years ago when interest rates bottomed out I made the choice of refinancing my 30 year into a 15 year at a 2.75% rate. I was borrowing at a rate of 4.375% prior to this. But I had the option of 3.5% if I wanted to refinance back into a 30 year. The balance on my existing mortgage was $190,000. The monthly difference worked out to around $436

My decision to do this was based on fear over my parents mistakes with mortgages. This made it so I would be free of a mortgage by age 44. Sounded great and for some the freedom is worth the hit towards retirement

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I am posting this because maybe my math is flawed. Or maybe my math is right and this could help someone.

I currently put $667 monthly into 401k. This doesnt change in either scenario. The below scenario is based on 7% returns compounded yearly

30 year

$853.18 monthly and $117,146.57 interest

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15 year

$1289.38 monthly and $42,088.60 in interest

30 year scenario:

$436.20 extra towards 401k

666.67 monthly to 401k + 436.20 = 1102.87 monthly for 30 years

$1,250,135.61 by age 59

15 year scenario:

666.67 monthly to 401k = $201,132.69 after 15 years

then 666.67 + 1,289.38 = $1956.05 monthly for the next 15 years

$1,144,774.92 in savings by age 59

So it looks like i shot myself in the foot $100,000

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