Difference btwn 15yr vs 30yr mortgage+extra payment of 15yr ... 30yr better?

[PricklyPete]

In stocks?

Of course, the stock market is child's play.

 

[highland145]

Of course, the stock market is child's play.

Just watched the Enron "documentary" with the tapes of the traders laughing about getting rich and screwing the John Q. I hate the stock market.

 

[TheTony]

I think it also depends on whether the person considering it is applying for a new mortgage or refinancing. People who got competitive 30 year rates several years ago may realize monthly savings by refinancing to a lower rate 30 year loan, but the actual difference in loan costs will be little or none (loan term resets, meaning several years more loan payments, plus any refi costs).

On the other hand, a refi to a shorter term loan will allow those who already have relatively competitive rates to realize additional savings even if current 30-year rates aren't low enough to make it worthwhile. Often for a similar (or marginally higher) payment.

 

[Vette73]

Ther is also a 20year option many don;t think about. Most only see/do 15 or 30. We went with a 20 year as it cut the intrest rate down enough but still gave us breathing room if need over the 15.

 

[Triumph]

i thought about this back in the days of interest only loans. the interest only loan had better rates than even 3 or 5 year arms, but after 3 or 5 years the interest only turned into a regular mortgage, just like a normal arm. so if you had the discipline and the cash flow, you could have paid down the principle/pal on an interest only loan at a pretty low rate. of course it doesn't matter now, but the point is that i thought of it first!

either way, i'm happing that i'm getting 4.375% on my mortgage. closing is in 2 weeks! 🙂

 

[Engineer]

At rates this low it's pretty insane not to do a 30 year and invest any potential savings in monthly payment difference. You'll be much farther ahead in the long gun because you'll easily outpace the interest rate especially after taxes.

Past performance does not guarantee future results.

The market is where it was 11.5 years ago and much lower in case of the S&P and Nasdaq. You're not guaranteed shit.

15 year rate is as low as 3.625 right now. Two office workers just did a refi at 3.875 and it was dropped 1/4 point within two days of them locking in, lol! 😛

By the way people, be real men (and women) and pay it off in 6 years and 8 months! :biggrin:

 

[Hacp]

Past performance does not guarantee future results.

The market is where it was 11.5 years ago and much lower in case of the S&P and Nasdaq. You're not guaranteed shit.

15 year rate is as low as 3.625 right now. Two office workers just did a refi at 3.875 and it was dropped 1/4 point within two days of them locking in, lol! 😛

By the way people, be real men (and women) and pay it off in 6 years and 8 months! :biggrin:

I think what he means is that at rates this low, even if you invest in CDs or treasuries, you'll be out ahead with 30 years if you count inflation.

 

[spidey07]

I think what he means is that at rates this low, even if you invest in CDs or treasuries, you'll be out ahead with 30 years if you count inflation.

Bingo. Balance. You can lop of a little more than a point because of tax deductions so the true rate of return you'd need to beat your mortgage is less than 3.5% on a 30 year. Make your money make more money for you. I don't think any financial planner would be foolish enough to suggest a 15 year note.

And with housing being a depreciating asset right now you want to NOT pay it off quickly, you want to spread it out as long as you can and build wealth elsewhere, not your house.

 

[Engineer]

Bingo. Balance. You can lop of a little more than a point because of tax deductions so the true rate of return you'd need to beat your mortgage is less than 3.5% on a 30 year. Make your money make more money for you. I don't think any financial planner would be foolish enough to suggest a 15 year note.

And with housing being a depreciating asset right now you want to NOT pay it off quickly, you want to spread it out as long as you can and build wealth elsewhere, not your house.

As for the knocking off a point because of the interest deduction, that only goes for those that have enough deductions to put 100% of the interest deduction above the standard deduction. Otherwise, you're already getting part (or all) of the deduction to begin with.

I think what he means is that at rates this low, even if you invest in CDs or treasuries, you'll be out ahead with 30 years if you count inflation.

Maybe....maybe not. If I could have predicted the future, I would have paid my home off even faster than I did while investing less in the stock market at the same time. That 7% interest (at the time) on my home was a far better investment (losing it) than the huge losses in both my personal and retirement accounts in the market.

 

[spidey07]

Engineer. You're suffering from short term thinking. Very bad move if you want to increase wealth. Check back in 20 years.

 

[Engineer]

Engineer. You're suffering from short term thinking. Very bad move if you want to increase wealth. Check back in 20 years.

Maybe, maybe not. Short term for over a decade = the suck. I can damn sure bet that I came out on top with my house paid off vs the stock market over the last decade (talking about dollar cost averaging, which is what the average investor does. Not talking about the lucky smuck that bought a stock that just happened to skyrocket and then sold out).

Can you guarantee that you'll get a very solid return over the next 20 years? Guarantee?

 

[ponyo]

*hi fives Engineer*

Nothing like being debt free and owing a home free and clear. People can say all they want about building wealth by having a mortgage but every wealthy people I know own their homes free and clear. They also pay cash for new property purchases.

Happy and worry free member of the debt free and paid off home club. 🙂

 

[Imdmn04]

Past performance does not guarantee future results.

The market is where it was 11.5 years ago and much lower in case of the S&P and Nasdaq. You're not guaranteed shit.

15 year rate is as low as 3.625 right now. Two office workers just did a refi at 3.875 and it was dropped 1/4 point within two days of them locking in, lol! 😛

By the way people, be real men (and women) and pay it off in 6 years and 8 months! :biggrin:

We all would pay off our mortgages if we lived in bumfuck Kentucky where an entire house cost less than a bathroom in the coastal cities.:biggrin:

 

[Engineer]

We all would pay off our mortgages if we lived in bumfuck Kentucky where an entire house cost less than a bathroom in the coastal cities.:biggrin:

spidey lives in bumfuck Kentucky but I guess there's an exception to every rule! :biggrin:

 

[sdifox]

Mine is amortised over 30 years. My mortgage allows me to pay up to 20% of principal back yearly on top of the amortised amount. So I am paying biweekly and we made lumpsums at anniversary. started paying 1500 every other week then we ramped it up to 2k every 2 weeks.

My mortgage will be done in less than a year (I think I have like 4k left), currently paying 300 every other week. Total time is 8.5 years. Principal was 200k.