Profile picture for archeoman

15 or 30 yr Mortgage

We are a couple aretired with adquate security.
Our tax liabilities are not high/
should I take a 15 or 30 yr Mortgage?
  • February 08 2012 - Staten Island
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Answers (15)

"tickle my buns and call me done"

 funny!

and..........why did anyone think this question was asked 4 yrs ago?

It says Feb 08....no year, which means it is current
  • February 16 2012
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" Feb 8th 2012 was a week ago.  This thread was from Feb 2008."
--

No, this thread was from Feb 08, 2012


  • February 16 2012
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Well then I've seen time travel!  Sharon Lewis didn't even have a profile until 2010 yet somehow she posted in 2008. 

so tickle my buns and call me done!
  • February 16 2012
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Profile picture for Rchan81
Feb 8th 2012 was a week ago.  This thread was from Feb 2008.
  • February 16 2012
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I think Feb 08th was only a week ago.

If you can afford it without jeopardizing your financial security take the 15. 
  • February 16 2012
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Profile picture for shapiroamg
Since the thread was started 4 years ago, lets make an assumption that they went with a 15 year and stop adding to this conversation.
  • February 16 2012
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Profile picture for bobby0703
just go with 15yr fixed to take advantage of 1% less rate than 30yr fixed.
Very unlikely that some stays in the same house for 30yrs.. so why waste money on higher interest especially in the first 10yrs??

If monthly payment is a concern with 15yr fixed, 5/1 ARM is best to go ahead with much less rate.
  • February 16 2012
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Profile picture for sunnyview
Sort of depends where you are in retirement and how your family health history is. With interest rates where they are, I would probably do the 30 year. If you downsize later on, the lower payment makes it more likely that you can have the house carry itself.

You also have to consider that if interest rates rise in the future (which I am sure they will) that you will have better investment options for that money than paying a higher mortgage payment with it. Dinkytown has a different types of mortgage comparison calculators that you can use to run some numbers.
  • February 11 2012
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Profile picture for SoCal Engr
I always prefer the longer term. As others have pointed out, it is most always possible to pay additional principal on the longer term (provided there is no pre-payment penalty).

However, you should always run the numbers.

Assuming a $250K principal, a 30-yr fixed @ 4% has a PI payment of $1194/month. A 15yr fixed @ 3.25% has a PI payment of $2030/month. That's a difference of $836/month.

Another, less obvious element is interest paid (assuming you can itemize). In the first year, interest on the 30yr note is $9920,, on the 15yr note is $7880. What that means depends on your taxable rate.

Bottom line is you should use some of the online calculators and run your own numbers. Excel also provides some built-in functions that can allow you to do more "what if" scenarios, but you need to be comfortable with Excel and using functions.
  • February 11 2012
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just for clarificaton - of course, the 15 yr rates are lower than the 30 yr rates........BUT, the payments will be higher.

The bottom line isn't so much the rate, but whether you will be comfortabe with the payments.

With a 15, or  20 year mortgage, you will be forced to make the higher payments each month...............with a 30 yr mortgage, your payments will be lower BUT, you have the option of paying more if you want, and reducing the length of the loan by doing so.
  • February 11 2012
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I agree with others who recommend that you speak with your accountant or financial planner. A quick inquiry may not cost you for this advice. If you do not have one, you may want to consider paying for a one-time consultation.

 One response I haven't heard yet is that a 15 year mortgage has an even lower interest rate than the 30 year; not bad! My husband and I are in our mid 50s and the last payments for our mortgage will be about when we retire and do not need the interest deductions that we need today.

  • February 11 2012
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Opinions vary, and this is an opinion based question.  One other option, 20 yr loan, we just refinanced and didnt like the size of the payments at 15 but compromised with 20yr loan.  Another thing to consider, most loans today do allow a person to make extra payments.  In other words, just making 1 extra full payment a year reduces a 30 year loan to less.  When clients ask me, consult your financial planner.  Look at the payments & go with what works best with your finances.  Rates are low, if you can refi, good time to do it.Best of luck.  Spirit
  • February 11 2012
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Define "adequate security"? If by that you mean you have plenty of money set aside for your retirement years, and your just looking for a tax break, I'd say don't take out a mortgage for a tax break. A mortgage will cost you far more in interest than it will save you in tax savings. 

If you can comfortably pay cash or do a shorter mortgage, I would. There's something to be said for paying money back in dollars that are worth less in the future (with inflation and a 30 yr mortgage). Although, I think the value of not owing anyone and complete security out weighs that.

That being said, if by "adequate security", you mean you have enough to squeeze by month to month, then the lower the payment the better. Just don't spend more than you can afford, since your income is probably semi-fixed.
 
  • February 08 2012
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Profile picture for Sharon Lewis
I agree with Debbie, 30 years gives you time, you can up the ante and pay it off if you want. Do not do a reverse please :)We both wish you long ,healthy and enjoyable retirement years!
  • February 08 2012
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Personally, I am in favor of the 30 payout.

Monthly payments on a 30 year mortgage, besides the fact that the rates are  at historical lows, will  be less than monthly payments for a 15 yr loan.

If you're goal is  to pay the house off in less than 30 years, all you have to do is make a couple of extra payments every year, which will allow you to gain equity faster.
But...............you're not forced to do that.
If you find there are months when you have unexpected expenses, you aren't locked into the higher payment, like you would be if you chose the 15 year mortgage.

This is a personal decision, assuming you qualify and have the option of either program.

Best wishes...
  • February 08 2012
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