For home buyers, the term of the mortgage can substantially affect the total dollars of interest paid as well as the household’s budget and net worth. Home buyers who can explore investment options may be able to increase their future net worth substantially by identifying the optimal mortgage term. This article examines the rate of return on investment for each year of the fixed-rate 15-year term mortgage and explores wealth-building opportunities available with the 30-year term mortgage.
Author: Stephen M. Avila, PhD, CPCU, is a professor of risk management and insurance and codirector for the Center of Actuarial Science, Insurance and Risk Management at Ball State University. He has published in Risk Management and Insurance Review, Journal of Insurance Regulation, Journal of Insurance Issues, Journal of Business Ethics, Journal of Financial Service Professionals, Journal of Insurance Education, Journal of Financial Education, Compensation and Benefits Review, and other research outlets.
Author: Manoj Athavale, PhD, is professor of finance and chair of the Department of Finance and Insurance at Ball State University. He has published in Financial Review, Journal of Financial Research, Journal of Financial Planning, Risk Management and Insurance Review, Compensation and Benefits Review, Journal of Insurance Issues, Journal of Investing, and other research outlets.