People often ask us about the pluses and minuses of shortening the term of their mortgages. The chart below clearly illuminates the long term savings on a sample 250k loan. But cash flow is often a significant factor to consider, and increasing your monthly payment by a third to gain the long term benefit of paying less interest over the life of the loan is not always an option. Even if it is an option, it may be a decision best made in conjunction with your tax accountant as you weigh the pros and cons of maximizing the mortgage interest tax deduction. Then again the peace of mind of owning your home outright as you head into retirement or just the next chapter of life is certainly a worthy goal. It is probably a good time to at least consider a 15-year mortgage with rates at, or near, all time lows.
