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Article:
How Long Your Mortgage Runs Determines How Much You Pay by: W. Troy Swezey The first thing most of us think about when the time comes to take out a mortgage on a new home is the interest rate. That's both perfectly natural and very sensible. The rate of interest we pay can make an immense difference ' a difference amounting to tens of thousands of dollars ' in what the actual cost of our house ultimately turns out to be. Still, interest rates are far from the only thing worth thinking about where mortgages are concerned. Other important variables need to be considered too. One is the question of whether to take a fixed interest rate of choose from among the many kinds of variable-rate mortgages that have been created over the years to meet the differing needs of different buyers. Another ' and a very important one ' is the rather basic question of how long you want your mortgage to run. Even with fixed-rate mortgages, a broad spectrum of time spans is commonly available. In most cases the extremes are 15 years on the short side, 30 years on the long. Some years ago, when a famous scientist was asked to name the most powerful force in the universe, he answered 'the power of compound interest.' This reply suggests that he was knowledgeable not only about the laws of nature but the principles of finance ' about what happens to even a modest sum of money when it continues to accumulate interest year after year after year. Even at a modest rate of interest, money in a savings account can double within ten years or less. The amount actually paid for a house with a $'100
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