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Unformatted text preview: . Suppose you invested $431 each month in a mutual fund with an average annual
return of 7 percent. At the end of
15 years, your $77,580 investment
would have grown to $136,611, or
$59,031 more than you contributed!
However, many people lack the
self-discipline to save rather than
spend that money. For them, the
15-year mortgage represents
forced savings. Yet another option is to make
additional principal payments
whenever possible. This shortens
the life of the loan without committing you to the higher payments. By
paying just $100 more each month,
you can shorten the life of a 30year mortgage to 24 1/4 years, with
attendant interest savings.
Sources: Daniela Deane, “Adding Up Pros,
Cons of 15-Year Loans,” Washington Post
(October 13, 2001), p. H7; Henry Savage, “Is
15-Year Loan Right for You?” Washington
Times (June 22, 2001), p. F22; Carlos Tejada,
“Sweet Fifteen: Shorter Mortgages Are Gaining Support,” Wall Street Journal (September 17, 1998), p. C1; Ann Tergesen, “It’s Time
to Refinance . . . Again,...
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