Should I get a 15 or 30 year mortgage?
The only way to answer this question is by considering many factors you didn't discuss here, things like your employment stability, debt ratios, reserve savings, time frame you expect to live in your house, retirement contributions, potential changes in family size, etc, etc. I'd very much recommend going over your entire financial situation (both current and expected future) with a lender to come up with the pro's and con's of each option for you. The interest savings on shorter term loans are great, but not if you end up in a financial bind, and have to rely on credit cards, reduce your savings, etc to make the payments. I've only had one borrower take out a 15 year loan and then later regret it, but I've certainly had many who considered them, then decided the flexibility of the smaller 30 year payment suited their current financial situation better than the commitment involved for the 15 year loan. Hope that helps, Ted | 08.18.15 @ 03:55
How long to you plan to keep the home?
Has your lender approved you for a 15 or 30 yr mortgage? Do this first (your choice of which). Next, ask your lender to approve you for the other choice. Keep in mind that there are a lot of variables to consider here, as Ted has indicated. So, rather than an apples to apples comparison. Try looking at this through the lens of your specific situation.
From an Investment Management (IM) perspective we look at paying the mortgage off as efficiently as possible through cash flows with a higher ROI. for example with a 5% mortgage, we want cash flows of at least 10% or double the mortgage. Again, there are many variables for this as well. Like, time, investable assets, etc., into the proposed deal structure.
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It's not what you make, It's what you keep that determines our lifestyle | 04.04.16 @ 20:55