Roger Schlesinger

Let's get right to the question above. A mortgage loan is made up on principal payments and interest payments. From the first payment you make the interest payment goes down and the principal payment goes up. How much goes to each is a function of the length of the loan. In the case of the 30 year loan the interest payment is higher from the start and it takes 14 years, 3 months at current interest rates for the interest to go far enough down and the principal payment rise high enough for the two to be even.

After that point the principal payment grows more every payment until the loan is over.

In a 15 year loan the first payment has the principal greater than the interest portion of the payment and continues to grow until the loan is paid off. The first payment for the 15 year is 59.2% toward the principal pay down and 41.8% toward interest. The 30 year fixed is almost the opposite on the first payment. 73% of the first payment goes to interest and only 27% goes to principal. There is the reason why it takes 30 years, under a simple interest scenario, to pay off the loan.

Does a 15 year loan seem better than a 30 year at this point?

Lets explore it further.

30 year view:

$300,000 4.375% mo. payment $1498

5 years

$62,823 Interest Paid

$272,952 Balance

10 years

$125,900 Interest Paid

$234,236 Balance

14 years 3 months

$160,454 Interest Paid

$204,320 Balance

19 years 8 months

$202,701 Interest Paid

$149,207 Balance

30 years

$239,228 Interest Paid

$0 Balance

15 year view:

$300,000 3.5% mo. payment $2145

5 years

$45,560 Interest Paid

$216,831 Balance

8 years 6 months

$68,178 Interest Paid


Roger Schlesinger

Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.