Profile picture for jkhale

is it smarter to use a 30 year fixed and pay more per month on principal or a 15 yr.

  • August 21 2011 - Bettendorf
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (6)

I agree Clay's answer is great but, I do like the option of getting the 30 yr and paying on it like a 15. I always recommend a loan with no pre-payment penalty in ANY situation. Especially if you are asking, to me reveals a hesitation. Your home is usually the largest item on a budget and this scenario would give you the leisure to plan for the worst - pay the minimum 30 yer figure, hope for the best - pay off loan in less than 7 years, and be flexible in enjoying your life living within a budget! 
  • July 19 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Nice post, Clay.   He explained it very well.  From pretty much any angle, the 15 year is going to be "smarter.'   The question you need to ask yourself is would it be "smarter" for you to have the option to pay less in any given month?   If something happens would that lower payment be important?  You're going to have to pay a slight premium to get that option (by way of the higher rate on the 30 year).  
  • August 22 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Lucky Lang
Clay's answer is correct!

There are a lot of angles to look at with financing so it is important that you are working with a knowledgable lender!

Good luck!

Lucky :)
  • August 22 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for daveskow
Smarter to use 15 yr as rate is lower and loan will be paid sooner If the 15 yr pmt is uncomfortable - go 30 yr route
  • August 21 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Using today's rates, prepaying a 30 Year with the same payment as a 15 Yr will payoff in about 190 payments vs 180 payments. There are a few things to consider, if a 15 Yr payment pushes your debt ratio up to 50% or more I would suggest using the 30 Yr and prepaying, if the 15 Yr payment is comfortable then it will be cheaper. If you have plenty of income for a 15 yr payment but have a 660, 670, 680 etc score it will be much less to use a 15 Yr as there are no credit score pricing adjustments for a rate & term as there are on a 30 Yr. One other consideration is MI, a 15 Year will have much lower MI than the 30 Year if over 80% LTV, so that expense should be factored in too.      
  • August 21 2011
  • 3Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

A 15 year mortgage usually has a lower interest rate than a 30 year mortgage.
  • August 21 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.