Those of you who work with mortgages & long-term financial issues all day forget that the rest of us mortals...well, we don't fully get it.
For both of the common fixed terms, as we show you in this video, compared with other options, the biggest key is that housing costs won’t be affected by interest rate changes and inflation.
With A 30-Year Term: In the first 23 years of the loan more interest is paid off than principal - meaning larger tax deductions. As inflation and costs of living increase mortgage payments become a smaller part of overall expenses. Take a look at the principal/interest curve that's depicted visually (under the payment 'dump truck'.) It's mathematically accurate - yes, you are paying a LOT of interest at the beginning.
With A 15-year Term: Loan is usually made at a lower interest rate. Equity is built faster because early payments pay more principal. And the loan is paid off earlier. It's worth comparing this curve to the 30-year curve.
Of course, compare payments, principal and interest totals to make a decision.
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