How Can You Save Thousands of Dollars on Your Southeast Michigan Home?

Southeast Michigan Real Estate Podcast with Derek Bauer

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Today we're going to be speaking about the difference between a 15-year mortgage and a 30-year mortgage.

Let's say you have a loan amount of $250,000 that does not take into account taxes, insurance, or other fees. The monthly payment on a 15-year loan would be around $563 more than the 30-year loan, but an additional $317 would be going towards the principle.

As you can see by looking at the graphs, by paying a little more in a 15-year loan, you actually pay $60,000 less in interest, and you also have a home that's paid for!

Fifteen years into a 30-year loan, you would have paid $126,000 in interest, but you would still owe $161,000! That is a pretty substantial difference.

A lot of people also say that you can write off interest in your taxes, so a 30-year loan is fine when compared to a 15-year loan. However, when we look at the numbers we can see that there is only a $500 difference in tax benefits, and you're paying $2,000 extra for the 30-year loan.

Before securing a home loan, assess your financial position, goals, and be sure to look at things with a long-term perspective. Tightening your monthly budget and forgoing luxuries now may be the right decision to provide more financial freedom and less stress down the road.

With all this being said, I am not an accountant and cannot offer you advice on this topic, but I just wanted to show you the difference between what happens in a 30-year loan compared to a 15-year loan.

If you have any questions, please don't hesitate to contact me!