Fifteen year morgage vs. a 30 year morgageWell it only took me buying my 3rd home to convince myself that I needed to bite the bullet and get a 15 year morgage vs. a 30 year morgage. We have been here for 5 years now and I am really glad that we did it. I actually enjoy getting my statement each month because 2/3rd of the the payment is actually going to principle.
A $100,000 loan on a 30 year term at 6.25% interest.
Monthly payment: $632
Principal portion of payment: Under $95 each month for the first year
Interest portion of payment: Under $536 each month for the first year
Ok now lets take the same loan on a 15 year term.
Monthly payment: $871
Principal portion of payment: Under $350 each month for the first year
Interest portion of payment: Under $521 each month for the first year
Of course the 15 year loan will cost you $239 more per month. However, your really should consider it savings because each month you will be contributing $350 to your principle. So after the first year you will have paid off $3500 on your house vs. $1200 on the 30 year loan. If you can't afford the 15 year loan either buy a less expensive house or put more money down. The chart below shows you how after just 8 years half of your payment will be going toward principle.
I found a great morgage calculator that allows you too compare 15 and 30 year morgages all on one chart. Click here to compare
Another excellent source for morgage rates check our Bankrate.com
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Note: Morgage intentionally misspelled to assist in your search. Morgage is properly spelled mortgage.