OKLAHOMA CITY — Wiley Chestland is taking advantage of record low interest rates.
Spirit Bank is offering 2.75 percent for a 15 year loan and 3.25 percent for a 30 year mortgage.
Wiley crunched the numbers and decided on a higher payment for a shorter term.
He said, “When I looked, that was my biggest reason to do it. How much I could save from a 15 to 30 year loan.”
For example: You’ll spend about $85,000 in interest on a $150,000 loan over 30 years. A 15 year mortgage will only cost you $33,000 in interest. That’s a savings of $52,000.
There is one obvious advantage to a 30 year fixed.
Your monthly payment is about 40 percent lower and you can always make a larger payment toward the principle.
You’re just not a saddled with the higher, 15 year payment.
Spirit Bank Senior VP Davied Feisal admits that takes discipline.
“If you want the flexibility, you should take the 30 year loan but the difference is, you have a choice to pay that higher payment,” Feisal said. “That’s your choice and it’s easy to make the choice not to do that and then you lose the interest savings.”
You can also benefit from a longer loan come April 15.
Feisal said, “That is really the sole advantage; a 30 year loan gives you a greater interest write off.”
The experts said, if you can make the higher payment and still maintain a good quality of life, a 15 year mortgage is a great way to own your home in half the time and pay substantially less interest.