mortgage - 15 year or 30 year? (update #33)

[Kindra178]

30 year. Why rush to pay it off?


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[theriviera]

30. Pay it off when you can or refinance later.

I agree.

[legaleagle]

Agreed on the 30, you really really don't want to be in a position where you have to worry about it because Things Happen in life. Definitely also ask about 20 and 25, and get a few quotes from other lenders. We refinanced for the 4th time in 9 years when the rates were really low last winter into a 25 because even with some cash out the payment ended up being about the same amount as the 30 we had been making extra payments on. Then I *surprise* got pregnant the following month so I am really really glad we didn't significantly increase our payments, esp since we may well outgrow this house in a few years (we would have been fine with 3 in a 4 bedroom but 4 is going to be pushing it).

[khm]

Yeah, I like "Things Happen". We did a 30. 15 was doable the last time we re-fie'd, but just felt like a titch too much of a stretch.

We did the 30 and from day 1 paid a significant amount extra. It is set to auto-pay, and all was well. I have a spreadsheet which shows how much the overpayments affect the overall timeframe and interest savings. It is a super fun "game". Ha. We're down to it being paid off in 25 years or something.

Then, last year, my husband and some partners started their own business. It was not even a *thought* that such a thing would happen when we re-fi'd last. A bunch of things just came together, and they went for it. They are doing well, but the ability to dial back the mortgage payment several hundred dollars is NICE. I generally don't feel like I need to, but I have a time or two when it made sense.

[Binkandabee]

Agreed on the 30, you really really don't want to be in a position where you have to worry about it because Things Happen in life. Definitely also ask about 20 and 25, and get a few quotes from other lenders. We refinanced for the 4th time in 9 years when the rates were really low last winter into a 25 because even with some cash out the payment ended up being about the same amount as the 30 we had been making extra payments on. Then I *surprise* got pregnant the following month so I am really really glad we didn't significantly increase our payments, esp since we may well outgrow this house in a few years (we would have been fine with 3 in a 4 bedroom but 4 is going to be pushing it).

With a 15, you are stuck with a large payment, no matter what life throws at you. With a 30.....your required payment is lower, but you can always send more. Much more if you want to.

I agree that a 20 may be the best compromise and this is exactly what we ended up doing. We refinanced our 30 year (which had 24 years left) to a 20 and have been making payments such that it will be paid off in 12.

[Ms B]

WWYD, in this market? now we're leaning towards doing 30 year and then investing the difference in $$ since it will likely give better return. I already max out my 401k, though DH could contribute a bit more. and we could do IRA's.

Get a quality professional mortgage broker involved instead of a loan officer from just one lender. The rates you quoted look high to me relative to the market (where I am, 15s are running 3.375 with no points and 30s are running 4.125 also with no points, and that's with only 20% down) and what you say you will be putting down.

A broker also may have more options on a 20 year term.

I do want to offer some perspective, though . . . DH and I bought our first house in 1999 with 10% down and we got an 8.75% rate on a 30 year (including a quarter point discount because I worked for the mortgage lender at that point and they could payroll deduct the payment) and we thought that we had a screaming deal. Just sayin' . . .

[westwoodmom04]

I agree makes sense to comparison shop but the rates look pretty accurate to me, they have been on the upswing since late May. We locked at 4.25 for a 30 about two weeks ago, no points (puchase, not a refi).

[Philly Mom]

Get a quality professional mortgage broker involved instead of a loan officer from just one lender. The rates you quoted look high to me relative to the market (where I am, 15s are running 3.375 with no points and 30s are running 4.125 also with no points, and that's with only 20% down) and what you say you will be putting down.

A broker also may have more options on a 20 year term.

I do want to offer some perspective, though . . . DH and I bought our first house in 1999 with 10% down and we got an 8.75% rate on a 30 year (including a quarter point discount because I worked for the mortgage lender at that point and they could payroll deduct the payment) and we thought that we had a screaming deal. Just sayin' . . .

I agree with this. We have a 15 that was refinanced from a 20. We chose it because of rate, very low (when the rates bottomed out) and we wanted to be done with our mortgage by college. We are in the AMT bracket so tax wise we never got much of a tax break from having the interest. We also did the early mortgage payoff with extra equity going every month thinking we could get it done in 10. Well, I have had some real changes to my job situation in the past year and it would have been nice to have had a lower mortgage payment. We did stop trying to paying it off sooner. The mortgage has been an extra stress. We can pay it, but it has limited other things. Everything is starting to even out again but I still don't think we will be going back to trying to pay off the mortgage quicker than 15 years, and at this point, I am glad we have the 15 year mortgage. We only have 10 years left and our taxes are not horrible for the area so it will make a real difference in our lives.

[twowhat?]

I would do the 30 with the intent on paying it off much, much sooner. Maybe not 15, but 20 or so. Doing the 30 gives you some flexibility.

This is exactly what we're doing too. The 30 gives a bit of flexibility/peace-of-mind/cushion in case some financial emergency comes up, but we regularly pay extra towards the principal with the intent of paying off sooner. I like the "Things Happen in Life" above

[Mommaof3]

I would do the 30.

This is an interesting read....

http://www.edelmanfinancial.com/educ...-long-mortgage