|
  |
|
|
15-year, 30-year, 40-year mortgages - Which One?
Clients ask me all the time: Should I go for a 15-year loan or a 30-year mortgage? Is there any advantage to signing up for 40 years? My answer is always the same. As long as the interest rate is the same, and there is no penalty for making early payments, get the longest term loan you can find. Why? Just do the math. A 5 year loan is going to have steeper payments than a 7 year. A 10 year loan costs you more per month than a 15 year loan. A 40 year mortage will make your monthly payment decrease over a 30 year mortgage. Now, the interest on these INCREASES with every year that is tacked on. Banks love this. But remember, I said "as long as there is no penalty for early payments"? That's right - you can make payments on your own that reduce the loan term, and thus the total interest charged. Want the same total interest charges of a 15 year loan? No problem. Grab a 40 year loan and just make sufficient payments annually to reduce the loan to the equivalent time frame of a 15 year loan. Why do it that way instead of the traditional method of just signing up for a 15 year loan in the first place? That's simple: flexibility. If you need the money that month (or all that year), you don't have to spend it on extra principal payments. Your loan payment is lower. You can breathe easier. When you are ready to pounce on the nasty-looking principal balance, go for it! An extra payment per year on a 30 year loan lops off some 7 years of payments! Making some double payments early on in a loan's lifespan is a great way to trim years off the loan term. Get in the habit of adding at least one extra payment per year. Or two. The same applies to car loans. Get a seven year loan with no penalty for early principal payments and slam multiple payments in all at once when you can afford it. The monthly bill is lower that way, but the overall interest charged doesn't change, unless you allow it to happen by not paying any extra. The point is, you are in control.
|
|
 |
|
No reactions yet.
Please login or sign up to rate this intel.
Please login or sign up to add a comment.
The copyright for this content entitled "15-year, 30-year, 40-year mortgages - Which One?" has been specified by the contributor as:
All Rights Reserved
This content may not be copied, distributed or adapted by anyone under any circumstances.
|
|
May, 2012
2008
January, February, March, April, May, June, July, August, September, October, November, December
2009
January, February, March, April, May, June, July, August, September, October, November, December
2010
January, February, March, April, May, June, July, August, September, October, November, December
2011
January, February, March, April, May, June, July, August, September, October, November, December
2012
January, February, March, April, May
|
|
Not a member yet?
Qondio is a powerful network for making it online. If you have a website to
promote, we can help.
Sign up and get in on the action.
|
|
Welcome to Qondio! Discover the awesome power this network can deliver by going to our About page. Or you could skip straight to the Sign Up form.
|
|
