15 Year Mortgage Loan
A 15 year mortgage is one of the most respected in the industry. If you can afford a 15 year loan then the banks will treat you great. The banks are very happy about it because they assume that they will have less risk. if you say you can afford it then most likely you can with ease ant the bank has a very good customer to work with now.
The 15 year loan is paid off in half the years as the traditional 30 year mortgage. That doesn't make the mortgage payment double but it does add a lot to the monthly amount. The reason it isn't double is because you only increase the principal when shortening the term amount. See below..
Figure it out for yourself on my mortgage calculator
$200,000 - 6% Interest Rate
30 Year mortgage - $1200 per month
Payment 1 - Interest - $1000 / Principal - $200
Payment 12 - Interest - $989 / Principal - $210
15 Year Mortgage - $1687 per month
Payment 1 - Interest - $1000 / Principal - $687
Payment 12 - Interest - $961 / Principal - $727
Confused? Don't be...
For the first mortgage payment you still owe $200,000 on both mortgages so the math is this...
200,000 x .06 (interest rate) = 12,000 / 12 (months) = $1,000
As you pay down more principal you will owe less and the calculation will change. With any mortgage the payment gets recalculated each month because you have added principal so you pay less interest. That's why the 15 year loan gets paid down so much faster.
You can also get the 30 year mortgage and pay extra principal each month to equal the 15 year loan. Since you're paying down the same amount of principal your new calculation for the next month will be the same.
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