Using a $100,000 loan and 7.25% interest rate as an example,
The 15-year note offers the opportunity to save considerable money over the life of the loan, since the period of amortization is half that of the 30-year note. This means that the total interest paid on a 15-year note as compared to a 30-year note is significantly less.
The actual calculation of the overall savings of the 15-year note over the 30-year note depends on several individual circumstances, one important variation is the borrower's changing income status.
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The drawback becomes apparent simply by calculating the cost of additional interest payments, which can total thousands for a few dollars difference in mortgage payments.
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