TRL Blog

Archive for March, 2009

Did you know the interest on a thirty-year mortgage is usually higher than the interest on a fifteen-year mortgage? The 8 percent you’re paying for your thirty-year mortgage in the previous example would most likely have been only 7.75 percent, or .25 percent less, if you had applied for a fifteen-year mortgage to begin with.
You need to give thought to this before you apply for your mortgage. If you are planning to pay it off in fifteen years, why would you apply for a thirty-year mortgage in the first place, the way so many people do? For a safety net, right? You figure that if money gets tight, you can always go back to paying it off with less expensive monthly payments over a longer period of time.
Your safety net, based on the difference between 7.75 percent and 8 percent, is costing you $21 a month, which at 8 percent interest adds up to $7,093 over the course of the fifteen years. Another way of looking at it is that you’ve just left 28,372 quarters on the street.