## Lower interest rates mean big savings

You already know that lower interest rates save you money, but do you know how much? Look at Table 3.6. See the striking difference in total interest costs between 15-year and 30-year loans. Also, recall that lenders sometimes charge about one-half percent less for 15-year rates. If, say,

Table 3.6 Total Interest Costs per \$100,000 @ Selected Interest Rates

Monthly 1,5-Year Monthly 30-Year

Rate (%) Payment (\$) (Total Interest, \$) Payment (\$) (Total Interest, \$)

Table 3.6 Total Interest Costs per \$100,000 @ Selected Interest Rates

Monthly 1,5-Year Monthly 30-Year

Rate (%) Payment (\$) (Total Interest, \$) Payment (\$) (Total Interest, \$)

 4.0% 740 33,128 477 71,864 4.5 765 37,628 507 82,376 5.0 791 42,326 537 93,248 5.5 817 47,060 568 104,372 6.0 844 51,884 600 115,820 6.5 871 56,798 632 127,520 7.0 899 61,784 665 139,508 7.5 927 66,860 699 151,712 8.0 956 72,008 734 164,132 8.5 985 77,246 769 176,804 9.0 1,014 82,556 805 189,656 9.5 1,044 87,956 840 202,544 10.0 1,075 93,428 878 215,900 12.0 1,200 116,018 1,028 270,296 14.0 1,332 139,706 1,185 326,564

All figures are rounded.

### All figures are rounded.

market rates were 6.0 percent (15-year) and 6.5 percent (30-year), the loans would cost \$51,884 and \$115,820, respectivelyâ€”a savings of nearly \$65,000 for the 15-year term (per each \$100,000 borrowed). For a historical comparison of interest rates and maturity spreads, Google "Treasury yield curve."

Even when you compare the 15-year or 30-year terms at the same interest rate, you still might save a pile of \$1,000 bills.

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