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15’s Good. 10’s Even Better.
I can get 15-year financing, but what I would really like is a 10-year mortgage. Is such financing available?
Not generally, but you can make your own. Here’s the recipe:
First, get a 30-year, fixed-rate mortgage.
Second, be certain you have the right to prepay the loan in whole or in part at anytime and without penalty.
Third, go to an online mortgage calculator to determine how much extra to pay. For instance, a $150,000 mortgage at 4 percent costs $716.12 per month for principal and interest. At $1,518.68 per month, the loan would be paid off in 10 years.
By prepaying the loan you will save a considerable amount of interest and lop off 240 monthly payments. The lifetime interest bill across 30 years is $107,803; the interest cost is just $32,242 if the loan is paid off in 10 years.
Is prepaying a mortgage a good investment? Paying off high-cost credit card debt is a better choice, but if your credit cards have a zero balance, then there’s a lot of sense and comfort associated with paying off a mortgage as quickly as possible.
For specifics, speak with local lenders.
My wife and I recently read both of the articles you wrote in our local paper. We wish to thank and commend you for stating plainly the issues that led to and continue to plague the housing market. Several years ago at the height of the market we were visiting Las Vegas. My wife loves to visit open houses to see the differing designs. They would have gladly sold us the properties with just our signature. All the paperwork was there, offering an 80-percent conventional mortgage along with a 20-percent second mortgage and additional cash incentives. We were aghast that anyone would offer or accept such deals.
Thank you. Not everyone agrees with my analysis but at least the subject is increasingly on the table.
Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to firstname.lastname@example.org.View Foreclosure Article Archives
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