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From: fadoc@brl-tgr.ARPA (Capt. Terry Dougherty )
Newsgroups: net.invest
Subject: Re: Question about Home mortgages
Message-ID: <11096@brl-tgr.ARPA>
Date: Tue, 28-May-85 15:07:27 EDT
Article-I.D.: brl-tgr.11096
Posted: Tue May 28 15:07:27 1985
Date-Received: Thu, 30-May-85 07:13:02 EDT
References: <110@novavax.UUCP>
Organization: Ballistic Research Lab
Lines: 37

> 
>      I am in the process of evaluating Home mortgage loans.  I have been
> given the following choices:
> 
> 	1.	30 year fixed rate @ 12.75%
> 
> 	2.	15 year fixed rate @ 12.25%
> 
> Which one is better and why?  Please consider tax deductions for interest
> payments and time value of money as well as total interest paid over the
> life of the loan.
> 
> Approximate mortgage amount is 60,000.
> --
>                                        Don Joslyn
>                                        {ucf-cs, allegra, neoucom}!novavax!don


For the 30 yr, 12.75% mortage - Monthly Payment would be $652.02 with the 
total interest over 30 years being $174,726.00.  Savings for taxes would
be difficult to determine since you did not provide any information as to
yearly income, number of dependents and other tax information.

For the 15 yr, 12.25% mortage - Monthly Payment would be $729.78 with the
total interest over 15 years being $71,360.30.  

The 15 yr mortage has the advantages of lower interest rate, faster pay-off
of loan balance and quicker build-up of equitity in the property (if you may
sell within 5 or 10 yrs).  Disadvantages would be higher monthly payment and
less interest deduction for income tax purposes.

For overall dollar for dollar value - the 15 yr mortage would be best if you
can afford the higher monthly payment.


                                     Terry Dougherty
                                     fadoc@brl-tgr.arpa