Economists Explain Why

20 years Mortgage Rates


If you are not sure that you can afford the payments of a 15 year fixed mortgage or you do not want to stretch your loan out to a 30 year fixed or 40 year fixed rate product, then a 20 year mortgage program might be right for you. 20 year home loan programs have become increasingly more popular in recent years by providing a happy medium between long term and short term fixed rate products. Typically, the rates for these loans fall somewhere between their 15 year mortgage and 30 year fixed counterparts.

1. Call the lenders and broker in the survey for quotes.
2. Visit the various companies’ web sites for more details.

Let’s take a look at a sample scenario of how a 20 year mortgage may stack up against other fixed programs

Sample Fixed Rate Mortgage Loan Criteria:
Couple in their new home that they bought with a 20 year mortgage.

20 Year Mortgage
5.75% Mortgage Rate
$125, 000 Loan
Monthly principal and interest payment: $877.60
Total Interest Paid over life of loan: $85, 625.05

30 Year Mortgage
$125, 000 Loan
5.875% Mortgage Rate
Monthly principal and interest payment: $739.82
Total Interest Paid over life of loan: $141, 335.81

15 Year Mortgage
$125, 000
5.625% Mortgage Rate
Monthly principal and interest payment: $1030.00
Total Interest Paid over life of loan: $60, 399.61

With the 20 year home loan, you shave off some of your monthly payment compared to the 15 year fixed. Plus, you save tens of thousands of dollars in interest by shortening the term of the loan from a 30 year program. Note: This is only a rough sample for educational purposes. Always be sure to review APR and closing costs when choosing a provider and program.



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