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Answers (11)
- Gary Cohen, "Gary Sells Money"
- Contributions:48
All the answers are good. Another option to consider is to go with the 30 year and then invest the extra amount you that you were going to have to pay on a 15 year into a growth mutual fund. In 15 years you will have more money available then you owe on the home. Get your money working for you instead of you working for your money.
- Kevin Rayan, "krayan"
- Contributions:12
with a 15-year mortgage versus a 30-year mortgage:
- You build equity much more quickly
- You own your own home in half the time
- You save more than half the amount of interest
- The rate is typically lower than the rates on 30-year mortgages and stays the same throughout the life of the mortgage
The 15-year mortgage may or may not be right for you, but it's worth considering. Use the Internet to educate yourself and run some numbers with a few of the excellent online mortgage calculators before speaking to your lender. By the way, the higher the interest rates, the more dramatic the savings in a 15-year mortgage versus a 30-year mortgage. As of this writing, mortgage rates are fairly reasonable. However, let's say that rates were to go back to the 9.5% level. Under that scenario, the payment for a $100,000 mortgage would be $840 per month and the total interest paid over a 30-year loan would be $202,707. The same amount of money borrowed over 15 years at 1/2% lower rate (remember, 15-year rates are usually 1/2 to 1% lower than 30-year rates) would result in a monthly payment of $1,014 and total interest paid of $82,567, a savings of $120,140! What are the chances you will save this amount yourself in 15 years, given the myriad of demands on your finances? Think about it and decide for yourself.
- Fred Chamberlin, "Eugeneloanguy"
- Contributions:8
I think that you have done your homework well and decided what is right for you. That is the answer, what is right for you. If you discuss the options with your mortgage professional and your goals, the right decision can come. There is no one answer for everyone. For some, a 15 year loan is ideal, but for others it would become a hardship to maintain. Good job with your research.
- Martin Wareing, "Martin Wareing"
- Contributions:3772
mpr,
best answer!! as you dig into numbers... the interest savings is mainly due to the speed of the payoff and not the rate spread. If you can't do it comfortably, don't. Good luck to you.
best answer!! as you dig into numbers... the interest savings is mainly due to the speed of the payoff and not the rate spread. If you can't do it comfortably, don't. Good luck to you.
- mpressler1
- Contributions:2
Thank you, everyone for your advice. After thinking it through, we're going to go with the 30 year, and "overpay" as often as we can. We've never carried credit card debt, and we're not comfortable being in debt.
However, as suggested below, we want to make sure we aren't saddled with a higher payment if something in our payoff plan goes awry and rising interest rates prevent us from refinancing into a 30.
Thanks again!
However, as suggested below, we want to make sure we aren't saddled with a higher payment if something in our payoff plan goes awry and rising interest rates prevent us from refinancing into a 30.
Thanks again!
- Rudi Hofmann, "LUXURY HOME LOANS CA"
- Contributions:7435
Many folks that opt for a 15F usually return to a 30F within a few years. The approximately 1/3 increase in monthly payments is hard to maintain, especially if an unexpected negative financial event occurs. .... Happy funding, Rudi
- Wayne Brown, "SDMortgagefinder"
- Contributions:1433
Do what makes you feel the most comfortable. You have recieved some good comments.
That said, I have had many clients over the years regret going with a 15 year loan. You can accomplish the same with a longer term loan, and just making the payments when you wish. The downfall is that shorter terms have slightly better rates.
Talk to a good broker in your state to discuss the pros and cons.
Good Luck,
That said, I have had many clients over the years regret going with a 15 year loan. You can accomplish the same with a longer term loan, and just making the payments when you wish. The downfall is that shorter terms have slightly better rates.
Talk to a good broker in your state to discuss the pros and cons.
Good Luck,
- Nic Netherton, "Colorado Lender"
- Contributions:7219
Go with the 15 year if you can afford it.
- Michael Dolan, "BrokerPro"
- Contributions:277
Work with a lender who can show you the numbers.
Know the facts and make your decision on the facts. Also, do not limit yourself to 15 and 30. Sometimes a 20-yr fixed is nice compromise.
Other options are available and I can tell you about them if you are interested.
Know the facts and make your decision on the facts. Also, do not limit yourself to 15 and 30. Sometimes a 20-yr fixed is nice compromise.
Other options are available and I can tell you about them if you are interested.
- Tony Gim, "tonygim"
- Contributions:158
There is a significant advantage to a 15 year loan. The first issue is to make sure you live a life that will be consistent with not borrowing to live or spend which it seems you do. The second is at what age do you want to be debt free? Consider what your life might be like without a house payment. Conpare the total "interest" cost of both a 15 year 4.125% and a 30 year loan 4.625%, both at no points, is $545 difference in payments but 1175/year in interest savings. This is a 17.96% return to simply pay $6540 extra!
- Nancy Lee, "An OrderLee Home"
- Contributions:1195
You begin by looking at all of the terms and conditions of the loan. Reject anything that is disturbing or incompatible. For example, in my last three houses I insisted on there being no penalty clause for early pay off.
Then, you take a step backwards and look yourself straight in the eye. How are you going to approach paying off the loan? Is it your intention to pay off the loan early? Are you the kind of person does not worry about the amount of interest you pay, you just pay the minimum each month? (When I say 'you', I mean you and your significant other or partner in paying off the loan.) These are deeply personal decisions.
For me, I chose a 30 year loan because it meant the lowest monthly payment - just in case my payoff plans hit a road block. Then I threw money at the loan. And I do mean I threw every spare cent (after allowing for paying other debts, growing my emergency stash slightly, and eating from time to time). I paid off the house I am in now very quickly. But then, I am allergic to paying interest.
Then, you take a step backwards and look yourself straight in the eye. How are you going to approach paying off the loan? Is it your intention to pay off the loan early? Are you the kind of person does not worry about the amount of interest you pay, you just pay the minimum each month? (When I say 'you', I mean you and your significant other or partner in paying off the loan.) These are deeply personal decisions.
For me, I chose a 30 year loan because it meant the lowest monthly payment - just in case my payoff plans hit a road block. Then I threw money at the loan. And I do mean I threw every spare cent (after allowing for paying other debts, growing my emergency stash slightly, and eating from time to time). I paid off the house I am in now very quickly. But then, I am allergic to paying interest.
How do I decide between a 15 & 30 yr?
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