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Well, if you refinance a 15 to a 30 and then pay as if it was a 15 with the additional payment amount going towards the principal instead of the interest it will pay it off in less than 15.
It is never a good idea to go from refinancing a 15 To a 30 year
Why? I don't think I'd ever choose a 15-year mortgage in the first place, but if I suddenly found myself in a 15-year mortgage, I would consider refinancing to a 30-year if it would improve cash flow and lower our DTI.
Why? I don't think I'd ever choose a 15-year mortgage in the first place, but if I suddenly found myself in a 15-year mortgage, I would consider refinancing to a 30-year if it would improve cash flow and lower our DTI.
Because you are adding as much as hundreds Of thousands of dollars in interest to the cost of the house.
Imagine you had say 5 years left on a 15 and most of your payment was now going for principal ...you just set the pointer back to start again and will now add thousands more to the house cost over 30 more years
Because you are adding as much as hundreds Of thousands of dollars in interest to the cost of the house.
Imagine you had say 5 years left on a 15 and most of your payment was now going for principal ...you just set the pointer back to start again and will now add thousands more to the house cost over 30 more years
That's one situation, but what if you were in year 3 with 12 years left? And/or rates were moving downward? And/or RE prices were moving downward? In 2018, I think the 15-year fixed rate was about 4%. If we fast forward to next year, it's possible that someone could be in such a situation. Improved cash flow and lower DTI would make it easier to continue growing your RE portfolio and take better advantage of those trends.
That's one situation, but what if you were in year 3 with 12 years left? And/or rates were moving downward? And/or RE prices were moving downward? In 2018, I think the 15-year fixed rate was about 4%. If we fast forward to next year, it's possible that someone could be in such a situation. Improved cash flow and lower DTI would make it easier to continue growing your RE portfolio and take better advantage of those trends.
The difference in cost added to a house between a 15 year and 30 year depending on rates can be more than the house....
You are effectively extending out the mortgage over 2x the length ..you really need to do the math ...many people end up paying as Much as 3x the price of the house with a 30 year
The difference in cost added to a house between a 15 year and 30 year depending on rates can be more than the house....
You are effectively extending out the mortgage over 2x the length ..you really need to do the math ...many people end up paying as Much as 3x the price of the house with a 30 year
You pay a lot more interest on any 30-year mortgage vs a 15-year mortgage. I would say that there are still good reasons to choose a 30-year over a 15-year.
I agree that you need to do the math and weigh the opportunity cost, I just wouldn't say that it's never a good idea.
You pay a lot more interest on any 30-year mortgage vs a 15-year mortgage. I would say that there are still good reasons to choose a 30-year over a 15-year.
I agree that you need to do the math and weigh the opportunity cost, I just wouldn't say that it's never a good idea.
A 30 is nice because you can always pay it off in 15 years ..but if you have financial hardship you can’t pay a 15 in 30 years.
You will just have a slightly higher rate but far more flexibility
I get the point on DTI, albeit if you're cutting it that close to get into a home, you may want to buy less home. If you're doing it to accumulate rentals, that can make sense if you are right on the cusp of being able to pick up an additional property, but unless you're expecting to pick it up the next property fairly immediately, I'd start with the lower interest rate on a 15.
I get the point on DTI, albeit if you're cutting it that close to get into a home, you may want to buy less home. If you're doing it to accumulate rentals, that can make sense if you are right on the cusp of being able to pick up an additional property, but unless you're expecting to pick it up the next property fairly immediately, I'd start with the lower interest rate on a 15.
As an example, we financed about $760k when we purchased our most recent investment property. I know jumbo investment rates are going to be higher, but assuming that you're comparing a 2.75% 15-year and a 3.0% 30-year, you're looking at about a $5,350/month payment for the 15-year and about $3.4k/month on the 30-year. Keeping things simplified, that's $64k/year for the 15-year and about $41k/year for the 30-year, for a cash flow difference of about $23k a year, and that's just for one property.
You can go to local universities in most states for 5-6k a year ..in fact those under certain incomes get all kinds of assistance ...parents are idiots for spending 125k to send kids to out of state colleges for worthless degrees .
All our kids went local for about 5k a year ......law school was local Too and ran 100k for my son ....He paid that off within his first 3 years of working
Excellent advice.
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