Quick question:I am looking to get a new home and I hav a few options.Let me know if this makes any sense (using current interest rates) ......I can get a 180,000 mortgage over 30 years that would cost $175,000 in interest, or a 15 year about $75,000 in interest..The payments for the 15 are $1404 and 30 are $988, the difference is $416 a month......If were to put that extra $416 a month in a savings account at 3.3% interest, in 15 years it will be $96000 dollars, almost making up for the extra $100,000 you spend in interest..... I *think* this make sense but I'm having trouble wrapping my head around if it should count since I have to pay another 15 years after that.....What do you think?
Houston,TX | Sep 17th 2009
by leroyfr...
Answer
by Rate1st...
Well the general idea is that you would take that $96,000 out of the bank in 15 years and payoff your mortgage. If you can afford the 15 year fixed payment then I would have to suggest that. In fact if you would be interested we are currently offering a 3.875% on 15 Year fixed with a 3 point buydown, this would make your payment only $1,320 for the 15 Year Fixed and that would save you a huge amount in interest over the term of your loan. If you would like more details please contact us. Toll Free 1-877-728-3178 or Apply online at ww.Rate1st.com Sep 17th 2009
I have always been a fan of stretching out the mortgage and invest the difference. But, sadly, while it works on paper.... The human element can get in the way. Many people simply aren't disciplined enough to put the $416 in savings EVERY month.But to answer your question(or not answer it).... It is really hard to nail down this question with certaintly. As you do have to figure that after 15yrs, you can now put $1404 per month in the savings acount. You have to account for that. On the flip side.... the invested difference on the 30yr loan can pay off the loan early!!Also there is no guarantee that you stay in the home for the 15 or 30yrs.Really, it comes down to more of a personal decision, imo.With rates this low.... It doesn't make sense to pay more than the minimum(30yr note). This is the cheapest money you will ever get.Another consideration... If you DID want to cut down the mortgage. 1 extra payment per yr cuts 7 yrs off the end of the note. Pretty good deal.Thanks for your question,Tom BurrisDallasLoanGuy.com Sep 17th 2009
by Mortgag...
30 years is a LONG way away. In REALITY, most ppl refinance every 5-7 years anyway. Life changes, buying a new home, relocation etc. lots of things that you cans foresee happening. if the larger payment is comfortable, and your job is fairly secure then take the 15 year, if not, take the 15 yeah and pay as mush extra as you can whenever you can.. then if life gets in the way you know that your "minimum" monthly payment is only $988. Hope this helpsBen Brown Sep 17th 2009 |
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