15-Year Mortgages
For a large percentage of the American consumer, the net cost of a
15-year mortgage is greater than a 30-year mortgage given similar or even
lower interest rates. Although one can save actual interest costs with a
15-year mortgage, after considering the income taxes paid and the lost
opportunity costs on the invested difference in monthly payments, a
30-year mortgage may actually be cheaper in the long run.
A 30-year mortgage may still be paid off in 15-years, and potentially
still have more money left over compared to a 15-year mortgage, if the
difference in monthly payments had actually been faithfully saved in a
conservative alternative. In addition, the lower monthly payments of a
30-year mortgage versus the higher monthly payments of a 15-year mortgage
may provide the consumer with more safety in the event of loss of job, a
declining real estate market, or for any other unforeseen expenses that
may come along that need to be made. In order to evaluate which type of
mortgage is appropriate for you, you should see your mortgage broker or
banker for a complete explanation.
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