|
Paying off a mortgage is like saving hundreds or even thousands each
month, and it may not be as hard as you think with a 15-year,
fixed-rate mortgage instead,of the traditional 25- to 30-year loan. Mortgage payments are figured on the outstanding loan balance, so payments in the early years go toward interest rather than equity. As your equity increases, the outstanding loan amount drops and so does the proportional interest charged. The shorter the loan period, the less interest paid over-all, and the faster your home equity grows. A 30-year loan for $150,000 at 10 percent would cost $1,316 per month. For a 15-year loan at the same interest rate, you'd pay $1,611 a month — just $295 more than with a 30-year loan. In exchange for higher monthly payments, you save $183,746 over the life of the loan, paying $140,143 in interest compared to $323,890 on a 30-year loan.
Alternative strategies
Borrowing and your budget  Find the monthly house payment you can afford, and read across to the nearest current interest rate. Where the two cross is about how much mortgage your monthly payment will buy. To calculate the mortgage for higher monthly payments — $3,500 for instance — combine the mortgage amounts for $2,000 and $1,50O payments.To calculate an 8 percent rate, for example, add $272,566 and $204,425 for a total mortgage of $476,991. For in-depth calculates check the following links:
|