Lower Your Debt and Save More
The 15 Year Solution
Since the great recession of 2008-2009, Americans have been de-leveraging: that is, paying down debt and saving more. One worthwhile strategy for paying down debt and saving more is to switch to a 15-year fixed-rate loan, which is one significant reason we have seen more interest in the 15-year loan in the past year.
If a borrower can swing a few hundred bucks more a month toward paying a 15-year loan, he can save a heck of a lot of money. A 15-year fixed-rate mortgage priced at 3.75 percent would produce a P&I payment of $1,454 on a $200,000 loan. The 30-year fixed-rate loan at 4.5 percent would produce a P&I payment of $1,013 on the same loan amount.
The big difference is interest paid over the life of the loan: The 30-year loan costs $164,800 in interest while the 15-year loan costs only $61,800.
It’s all obvious, to be sure, but sometimes the obvious offers a very good opportunity, especially at today’s interest rates – and especially for someone pursuing a lower-debt lifestyle.
