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From the Wires
Save With Shorter Term Mortgage According to BMO Harris
Interest Savings Outweigh the Monthly Payment Increase
By: Marketwired .
Feb. 12, 2013 11:42 AM
MINNEAPOLIS, MN and ST. PAUL, MN -- (Marketwire) -- 02/12/13 -- If you could save thousands of dollars over the life of your mortgage AND pay the loan off 10 years sooner, would you be willing to spend just a few hundred dollars more each month on your mortgage payment?* BMO Harris Bank knows that it is important for a homeowner to choose the right mortgage. With a number of options available, you should tailor your mortgage to your lifestyle, your current financial situation, and your risk tolerance. For those looking to be mortgage-free sooner, choosing a mortgage with a 20-year term instead of a 30-year term can save thousands in interest costs over the life of a mortgage without a significant increase in your monthly payment. Here is an example of how choosing a 20-year fixed rate mortgage instead of a 30-year could save you more than $52,000:
---------------------------------------------------------------------------- 20-Year Term 30-Year Term ---------------------------------------------------------------------------- Mortgage Value $200,000 $200,000 ---------------------------------------------------------------------------- Mortgage Rate* 4 percent 4 percent ---------------------------------------------------------------------------- Monthly Principal and Interest Payment Amount $1,212 $955 ---------------------------------------------------------------------------- Total Interest Cost $90,871 $143,739 ----------------------------------------------------------------------------
* The chart above assumes an average interest rate of 4 percent over the life of the mortgage. The rate shown is used for illustrative purposes. Typically, rates are lower for a 20-year term which may save you additional interest costs. "A 20-year term ensures that homeowners can build equity quicker and pay off their debt faster," said Chuck Meier, Vice President, Minnesota Mortgage Sales Manager, BMO Harris Bank. "In addition to the interest savings from the shorter term, a 20-year mortgage rate is currently lower than a longer term; which means you could save additional money." With interest still at historic lows, it's not too late to revisit your financial goals and find a mortgage solution that makes sense for you.
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