Say you have a $150,000 mortgage. Let's compare
how much money you would pay out in interest over 30 years vs. 15
years. The following chart shows the numbers. The monthly loan payments
are principal and interest only. As you can see, with a 15-year
loan, you would save $117,001 in interest.
||Interest cost: 30-year
vs. 15 year mortgages
Other factors to consider
Take the example above: With the 15-year loan,
the monthly mortgage payment is $313 more than the 30-year mortgage.
You may want to put that money toward another investment. For instance,
in a bull-market economy, you can make more money investing that
$313 monthly in mutual funds or other investment securities.
Keep in mind that there are ways to prepay your mortgage
and whittle away at the principal each month, so that the loan is
paid off sooner than 30 years.
Also, it depends on how long you plan to own the home
you are purchasing. If it's less than five years, you may be better
off with an adjustable-rate mortgage, or ARM.
Compare the rates
To find out what the mortgage principal and interest
would be on a particular loan you may be considering, first input
your ZIP code to get best mortgage rates in your area. Then proceed
to the Bankrate mortgage
Another helpful source of information, Your Best Interest
Report, the latest Bankrate.com survey of interest rates on 30-year
fixed mortgages and survey of interest rates on 15-year