Interest Paid….is Interest Paid

Given a certain loan amount and a certain period of time, a good question to ask is which loan program would allow me to pay the least amount of interest over the set period of time? Let’s put it into actual numbers.
Assume the following:
- $230k loan amount
- 6.125% interest rate
- 5 year time period in which you will pay the loan off

On a 30-year fixed loan, at the end of 5 years, I will have paid $69,356 in interest. …unfortunately …I still have 25 years left of payments before the loan is paid off. On Bankrate.com’s website, it allows you to add a monthly extra payment. I found that by adding $3000 extra per month, I’d have the loan paid off by the end of 5 years which in turn means I’ll “only” have paid $38,272 in interest. Read the rest of this entry »