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Tuesday, August 29, 2006
Roger Schlesinger :: Townhall.com Columnist
How important is the right mortgage?
by Roger Schlesinger
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? 15 year fixed at $986/mo. Save 11 years on the mortgage, totaling $71,133, and $514/month for 20 years (or $123,360).

? 10 year fixed $1,293/mo. Save 16 years on the mortgage, totaling $103,296, and $207/month for 20 years (or $51,120).

The equation isn't complete until you calculate what happens after the mortgage has been paid off and the monthly payment is now invested. A proper refinance at the right time corrects the errors that are made along the way.

Work the numbers; do not let the numbers work you. Spend your time on the one financial obligation that can make the biggest difference in your life, your home mortgage. Don't look back at the errors, we all made them. Look ahead to the opportunities that you can take advantage of to create the financial goals that are achievable without a struggle, just better advice and better planning.

Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom. Roger is the President and founder of Manhattan West Mortgage.
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About The Author

Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.

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(9 comments so Far)
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Reply # 1
Date: Aug 30, 2006 - 5:05 PM EST
Power of Compounding
Not sure what math Jennifer is doing, but she missed the power of compounding interest.

Running the numbers for the 30 yr case,
$354 a month @ 7% (compounded monthly) gives
a total after 30 yrs of $434,388.97.

and then you factor in
- tax savings
- you are generating the liquidity you need for a rainy day by saving $354/month

of course, you have to be disciplined and actually save that $354/month

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Reply # 2
Date: Aug 30, 2006 - 4:21 PM EST
Do the Math
Think beyond the money you can get now and consider the long term benefits.

The payment difference at the end of the 20 yr. is $84,960. Add the amount that can be saved from the mortgage payment over the next 10 years, $278,600, and the is a total $363,560. That's a huge chunk of savings by taking a 20 yr loan rather than a 30yr loan.

If an individual were to take the 30 yr loan and then invest the $354 a month difference at 7% as suggested, they will earn a total $136360.80 over the 30 yr. period of the loan.

Compare that to the savings earned by taking the 20 yr. loan and you have $227,199.20 difference between the two.

Obviously, you’re always better off with a shorter loan.
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