How Much Money Am I Wasting on Mortgage Interest?
There are ways to pay less mortgage interest.
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Looking around at various mortgage options can save you thousands of dollars in interest over the duration of the loan. The choices of interest rate terms allow you to create a mortgage repayment schedule that fits your budget and control how much total interest you will pay. Changing how you make your payments can also allow you to pay off your mortgage faster and save even more interest.
Fixed-rate mortgages typically come in terms of 15, 20 and 30 years. A longer term will result in a lower payment but will also cost you the most interest over the
duration of your loan. With longer terms, your lower payment reduces the mortgage balance slower and therefore you pay more interest. Consider a $250,000 30-year fixed-rate mortgage with an interest rate of 4.0 percent. Your monthly payment would be $1,193.54, resulting in $179,674.40 in total interest over 30 years. On a 15-year mortgage your monthly payment would be $1,849.22 with total interest over 15 years equal to $82,859.60. If you can afford the monthly payment, you can pay off your mortgage in half the time and save more than half the interest. If you could only afford the 20-year mortgage payment of $1,514.95, your total interest would be $113,588, still a significant reduction from the 30-year mortgage.Source: finance.zacks.com