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You will receive a lower interest rate if you select a 15-year loan. Your savings should be between one-quarter and one-half percent. It's possible to get an even lower rate if some lenders are trying to generate more 15-year loans.
The potential savings goes beyond the discounted interest rate, however. If you can afford the 15-year payment – which is not close to double the 30-year payment, only about 40-50 percent higher – you will save thousands, possibly hundreds of thousands of dollars in interest over the life of the loan. The quicker amortization (pay back) makes a huge difference in the interest cost, regardless of the rate of your loan.
Therefore, even if your goal is not to pay off your mortgage loan, a 15-year term is very advantageous to you. If your cash flow permits, you will have a lower interest rate and save a large amount of money if you choose a 15-year mortgage loan.
|Sheri Ann Richerson|