Comparing 15, 30, and 40 Year Mortgages
Loan Term (Years)
Payments per Year
Total Number of Payements
Monthly Payment Amount
Total Interest Paid
The person who uses the 40-year option in this example pays over $100,000 more in interest over the course of the loan than the person with the 15-year mortgage. This isn't necessarily bad. With a low enough interest rate, one can argue that it might be wise to stretch out repayment of the mortgage as long as possible and put the difference to work in a Roth IRA. There is certainly some merit to this strategy. However, it is important that if you go this route, that you actually follow-through otherwise, you'd do much better with the 15-year mortgage.
Tags: Comparing Mortgages, 40-Year Mortgages, Mortgage Comparisons