13 Jully 2010

($100,000 of mortgage at 4.25% with monthly payments):

Amortization    Payment    Years Until Principal > Interest

15 years         $750          0 (You pay more principal from the beginning)
20 years         $617          3.7
25 years         $540          8.7
30 years         $490         13.7
35 years         $456         18.7

As it’s seen here, taking on 10 years to your amortization will actually add another 10 years to reach the moment when you pay off more principal.
So in the end, it means that if you’re thinking about a 35-year amortization, be sure you can afford some pre-payments at least in the foreseeable future.  Otherwise, you may stuck paying the interest much longer than you can even imagine.
On the whole, there’s nothing wrong about paying off your mortgage as fast as you are comfortably able to. You just need to remember that even if inflation is 2% per year, $1.00 today is only $0.30 in 35 years. In other words, paying now can be more expensive than later.

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