30 year fixed? Not a chance!

Posted: Jun 18, 2006 12:01 AM

People know that I don't like or recommend 30-year-fixed loans, but they can't seem to remember why. It is very simple. The 30 year doesn't pay your loan off very fast and it isn't the lowest payment either. So what do you have? You have a loan that is highly competitive on it's rate and doesn't solve anyone's needs. But it is safe because everyone's grandmother or grandfather, sister or brother, cousin or aunt has one or had one and they are smart, well-educated borrowers. Wrong!

Everyone always assumes that their older relatives are sharper than them, and they have one so it has to be good for you. If you ask them why they have it they will probably tell you, if they can remember, they took it because an older relative had one and so it had to be good for them. Sound familiar?

Some people take 30-year-fixed loans so they don't have to figure out what the heck they are trying to do with their financing. Some people don't ever think about why they have a 30 year, they just always had one and always will. No need to rock the boat. Wrong again!

The amount of extra interest paid on 30 year fixed rates might be large enough to pay off our national debt! The inability to do life-long dreams because of lack of money stems in most cases from the 30 year fixed. How can that be true? It takes 21 years (approximately) to pay off half the balance of a 30 year fixed. It takes 10 years to pay off the loan when you have a 10 year fixed; 15 years when you have a 15-year loan and 20 years to payoff a 20-year loan. I could stop here and you have enough evidence to believe me; but I won't Instead I will show you the following chart:

$250,000 Loan 30-year payment is


$367,920 to pay off 1/2 of the loan

20 year $1827/month

$438,480 total over life of the loan.

15 year $2109/month

$379,620 total over life of the loan.

10 year $2759/month

$331,080 total over life of the loan.

It is time to start building your finances the right way. If we can make it simple and show you the mistake you have been making then I believe it is time to call us.

We're Manhattan West at 949-5553 or write to me @MortgageMinuteGuy.com.

As the economy gets significantly more expensive you must decide to quit throwing your money away and get onto the Road to Financial Freedom. I know you can get there.