Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: notesfiles - hp 1.2 08/01/83; site hp-pcd.UUCP
Path: utzoo!watmath!clyde!burl!ulysses!mhuxr!mhuxt!houxm!whuxl!whuxlm!harpo!decvax!ittvax!dcdwest!sdcsvax!sdcrdcf!hplabs!hp-pcd!john
From: john@hp-pcd.UUCP (john)
Newsgroups: net.consumers
Subject: Re: mortgage question
Message-ID: <69600022@hp-pcd.UUCP>
Date: Mon, 8-Apr-85 11:41:00 EST
Article-I.D.: hp-pcd.69600022
Posted: Mon Apr  8 11:41:00 1985
Date-Received: Fri, 19-Apr-85 01:42:26 EST
References: <188@mhuxn.UUCP>
Organization: Hewlett-Packard - Corvallis, OR
Lines: 26
Nf-ID: #R:mhuxn:-18800:hp-pcd:69600022:000:1175
Nf-From: hp-pcd!john    Apr 16 08:41:00 1985

<<<<


   I read an article in the paper that compared a 30 year fixed rate   
mortgage with a 15 year one. They showed that by paying an extra $130
a month for 15 years that you would save about $172 K. It sounded real
great until you went back and looked at some of the areas that they
didn't cover.

   For one thing they did not even mention taxes in the article. That $172K
is all deductable so a large part of the savings will simply go to the
goverment as higher taxes. They also didn't figure in the value of having
an extra $130 a month to spend. If the 30 year mortgage were to be paid off
with exactly the same payments as the 15 year then it would be prepaid sooner
and only cost an addition $18,600. After taxes that could be as low as $10,000.

   That $10,000 extra that a 30 year loan costs does provide some benefits.
If interest rates rise so that you get a better return in the money markets
then you can get a higher return for your $130. The biggest advantage is that
if disaster strikes then you can easily pull back your payments to a lower
level. That could make the difference between keeping or losing your home.



John Eaton
!hplabs!hp-pcd!john