How Does My Amortization Affect The Amount Of
Interest I Pay?
The amortization period has a dramatic effect on the amount of interest
paid over the length of the mortgage. Consider the example of a
$150,000 mortgage with an interest rate of 6.20%*
With a 25 year amortization the monthly payments are $977.61
With a 20 year amortization the monthly payments are only increased by
$107.57 to $1085.18. The savings in interest would be $32,843.40
With a 15 year amortization the monthly payments are increased by only
$298.03 to $1,275.64. The savings in interest would be $63,669.38
* The example assumes the interest rate will remain constant through
the whole amortization period.
Amortization: The period of time, often a maximum of 25 years,
required to reduce the mortgage debt to zero when all regular blended
payments are made on time and provided the terms (payments and interest
rate) remain the same.
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