Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10 5/3/83 based; site homxb.UUCP
Path: utzoo!linus!decvax!harpo!whuxlm!whuxl!houxm!homxb!disc
From: disc@homxb.UUCP (Scott J. Berry)
Newsgroups: net.consumers
Subject: Re: Mortgage Question
Message-ID: <586@homxb.UUCP>
Date: Fri, 19-Apr-85 13:40:24 EST
Article-I.D.: homxb.586
Posted: Fri Apr 19 13:40:24 1985
Date-Received: Mon, 22-Apr-85 01:17:41 EST
Organization: AT&T Bell Labs, Holmdel NJ
Lines: 29


>>    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.

> Ummm...something's wrong here.
> 
> If you take out a 30-year mortgage and make exactly the same payments
> on it as you would on a 15-year mortgage at the same interest rate,
> your total cost will be exactly the same for both loans.


Ummm...something's wrong THERE

If you take out a 30-year mortgage, your interest is
calculated based on a 30-year repayment schedule.  If
you want to make an additional principal payment that
month, fine.  But you still owe the (30-year) interest--
the principal is not reduced instantaneously.  The amount
of that "extra" interest does diminish monthly, however.


			Scott J. Berry