This is a bit more than our other example, but stay with me here. This scenario provides monthly principal and interest of $1,479.38. Let's take the same $200,000 fixed loan at 4%, but this time let's select a 15-year term. So In reality that $200,000 home really costs you $343,739! The 15-Year is the Real Winner After five years you still owe $180,895 after 10 years you still owe $157.568, and after 30 you will have paid the bank $143,739 in interest. The road to building equity is slow moving. Your monthly principal and interest is $954.83, but it would take 153 payments until more money is directed to principal than interest. For example, let's assume you have a $200,000 fixed mortgage for 30 years at 4% interest and no down payment. As time progresses more is placed toward principal, but it takes years before the interest and principal are equal paid. In the beginning, a large portion of your payment goes to interest. Unless you plan to move in a few years, the 15-year is the way to go. It can't be expressed enough that you should almost always choose a 15-year fixed mortgage. Using our amortization calculator you can enter various scenarios to reveal the true cost of the place you will call home & any other type of loan. This may seem like a no-brainer, but so many people look only at the monthly cost and never consider the total cost. No one factor affects the cost of purchasing a house more than length of the loan. The Full Monthly Repayment Chart and Understanding Your Payment Allocations
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