15-Year Mortgage at 5% Interest
Monthly payment = $2,372.28
Total payments = $427,028.69
Total interest = $127,028.69
15-Year Mortgage at 3% Interest
Monthly payment = $2,071.74
Total payments = 372,914.30
Total interest = $72,914.30
At the 3% rate, you’d save . . .
- About $300 on your monthly house payment
- About $54,000 on the total payment on your home (primarily from the difference in the mortgage rate interest).
That’s not a good deal – it’s a great one for homeowners. You likely have some time to make a decision. The Federal Reserve says it’s committed to keeping rates low until 2014, so the picture shouldn’t change all that much for the next two years.
You will, however, need stellar credit to get the low rate, and you’ll need a stable income to pay the higher monthly payment with a 15-year home loan compared to a 30-year home loan.
But if you can manage those two tasks, the financial rewards are abundant. And right now, you really can strike while the iron is hot.