The 15 year mortgage question is asked often – everyone wants to do it, but for many, the
larger loan payment is scary. So, is it worth it? Well….you decide. If Jane has a 400,000
mortgage and she gets to choose between a 30 year loan at 4% or a 15 year loan at 4%, what should she do?
Her 30 year payment is $1909 and the interest Jane will pay, over the life of the loan, is $287,477.
Jane’s 15 year payment is $2959 and the interest she will pay, over the life of the loan, is $132,575.
With the 15 year loan, Jane save $154,902 in Interest. In some households, that savings can pay for the kid’s college.
Being a mortgage broker for 15 years, I can tell you some very nice clients, see the higher payment as a higher bill, only?
The best part of the higher bill is you are paying yourself – at the beginning, roughly 55% of your larger payment goes to
reduce the balance or amount of debt you owe, and that % grows every payment. You are really paying yourself and if we can focus
on that fact, the 15 year mortgage has an incredible amount of merit.
In the above 15 year loan scenario, you pay yourself and you save over $150,000 in interest – real money. So, should you do a 15 year
mortgage or put the extra money in Savings? Guess what, almost everyone will pay the mortgage bill each month and almost noone
will put the extra money away, if they have a 30 year fixed loan. You can decide whats best for you!
Have a great Memorial Day weekend!
Our 4 kids, that cost a fortune, but we love them all.