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Those of you have a house, do you all have 30 year mortgages?
My husband and I are thinking about buying a home, but I don't know about getting sucked into this 30 year mortgage thing.
But we don't know what to do? Should we be like everyone else and suffer through debt slavery like everyone else to be in a nicer neighborhood/more expensive house or do we buy something much cheaper and get a 10 year/15 year fixed mortgage instead?
We have a 15, and hope to have it paid off in 7-10, 30 yr? Fuggetaboutit.
Quote:
Originally Posted by dcashley
My adivce: make sure you can make the mortgage payments on only one salary. Then buy as much as you can afford.
Best advice you can ever get.
My wife and set our lifestyle based up around ONE INCOME and counted the other as extra. This type of thinking was years ago, before any economic distress was on the horizon. She got laid off and was out of work for seven months (working again with a government job) last year. It got a little tight near the end but was completely manageable. If we had based our lifestyle on both incomes we would have been in big trouble.
We have a 15, and hope to have it paid off in 7-10, 30 yr? Fuggetaboutit.
Best advice you can ever get.
My wife and set our lifestyle based up around ONE INCOME and counted the other as extra. This type of thinking was years ago, before any economic distress was on the horizon. She got laid off and was out of work for seven months (working again with a government job) last year. It got a little tight near the end but was completely manageable. If we had based our lifestyle on both incomes we would have been in big trouble.
Guys, for everyone who is advocating the 15 year, I haven't heard a compellling argument for it (when you can make the extra principal payments on a 30 and still have major flexibility that you can't measure in dollars..)
Guys, for everyone who is advocating the 15 year, I haven't heard a compellling argument for it (when you can make the extra principal payments on a 30 and still have major flexibility that you can't measure in dollars..)
What major advantage is there???
Historically, you can get a lower interest rate on a 15 year than you can on a 30. Right now I'm seeing about a quarter point benefit on the 15 year mortgage.
We have a 15, and hope to have it paid off in 7-10, 30 yr? Fuggetaboutit.
I agree. That's how my thinking is. Get a 15 year and pay it off in 5-10 years.
The only thing to consider though is neighborhoods and commute time to work which can significantly change the price.
Historically, you can get a lower interest rate on a 15 year than you can on a 30. Right now I'm seeing about a quarter point benefit on the 15 year mortgage.
Yep. That "much less" isn't really the case right now since rates are pretty close. I think I've seen higher in the past, though.
Assume a $200K loan.
If you get a 30 year fixed at 5.25%, you'd have to pay $1613.66 a month to pay it off in 15 years.
A 15 year fixed at 5% would have P&I payments of $1587.53.
This ratio holds roughly the same if you pay them both off early, say 10 years.
That's a $25 a month or so difference is basically the opportunity cost of being able to switch back to the lower 30 year fixed payments ($1100 or so) if something happens in life where you need the extra money. If you're 100% sure you can pay the 15 year payment no matter what happens, that's one thing. But I think for most people it's nice to have the added cushion in case something comes up, even if it costs you $5000 or so over the life of the loan in interest.
The balance may tip in favor of the 15 if the difference between the two rates starts to grow. As always you have to do the math for your particular case.
The only reason to get a 30 yr is to hedge against employment or income problems. The payments are lower--so you have more "leeway." You can still make extra payments. That's what I did.
We had a 30 year mortgage that we paid off in about 15 years just by making extra principle payments. As others have stated, it's the most flexible way to go.
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exactly 15 is the only way to go
