Change your mortgage terms? Just ask

Interest. Blechhh. Especially mortgage interest. You borrow some money from some lender then not only do they want their money back but a little extra, if you please.

How much do you pay in interest? It depends upon how much money you borrow and for how long. Typically the longer you borrow money the lower your payments will be. But the catch is that you'll also be paying more in interest charges while taking longer to pay down the principal. Comparing a 30-year fixed rate mortgage payment at 6% to a 15-year fixed rate of 5.75% on a $250K note you'll find the payments are about $1,499 and $2,076 respectively. Even though you'll notice that a 15-year fixed rate is most always about a fourth percent lower than a 30-year rate, the monthly payments are higher with a 15-year loan. And you also pay a lot more interest when you stretch a loan over a longer period of time.

Over the course of both loans, the 30-year note has you paying $289,595 in interest alone...more than what you originally borrowed! At the same time, the 15-year loan collects $123,684 in interest...less than half of a 30-year loan. The problem with a 15-year loan is that it's more expensive every month, nearly a third higher. Even though financial experts says it's best to pay less interest, not more, the 15-year loan may simply be out of reach for many borrowers. But you don't have to choose between just a 30 year or 15-year note...there are other choices.