So the houses I've owned have carried a 30-year fixed mortgage. That's what most people did, and probably still do.
When Dave Ramsey was touting the benefit of 15-year mortgages, I must have been paying attention, because when we got the mortgage on the VT house, I went for a 15-year mortgage.
I have seen the light.
For fun, I just compared the difference in amortization between my VT house--15-year mortgage at 3.75% interest--and my NJ house--30-year mortgage at 5.5% interest.
The NJ house amortization calendar showed that it takes 18 years to get to the point where you're paying more down on the principal than the interest. 18 years!!!
OTOH, I've been paying more toward principal than interest on the VT house already! And I have already reduced the principal by $40k since 2018--only 5 years.
I realize that the difference in the interest rates accounts for some of the difference in principal pay-down, but really!! I am so glad I took Dave Ramsey's advice, and I wish I had done it on other houses.
I have already encouraged my SIL/DD to get a 15 year mortgage for their house, which they did.
This falls under the need for financial literacy courses somewhere--in high school maybe? Or would those numbers not matter to a lot of people? I think most people want the lowest monthly payment possible, and don't consider the high cost of stretching out mortgages 30 years. But the financially sane thing definitely is to get a loan with the shortest terms possible. You wise folks are thinking "no duh", but those two line charts side by side really amazed me.
Any thoughts?