But if I could confidently make more than 3% on my money, wouldn't it be a smarter investment to take out a 30 year loan, have a lower monthly payment, and invest the money instead in the stock market (again, only if I was sure to make more than 3%)?

Anonymous wrote:

Anonymous wrote:


"Never understand the mindset of people who wants to pay more interest so they can deduct it come tax time... "


This is a point our accountant often makes to us.

Why give it to the government when we can give it to the bank? That will be better for the country, right?

I think you're missing the point. With less interest, you give less to the bank. Even if your taxes are slightly higher because you can't deduct all that interest you're not paying, you still end up with more in your pocket at the end of the day.

Anonymous wrote:

Anonymous wrote:


"Never understand the mindset of people who wants to pay more interest so they can deduct it come tax time... "


This is a point our accountant often makes to us.

Why give it to the government when we can give it to the bank? That will be better for the country, right?

If it wasn't for the bank, you couldn't buy that fine residence.

Anonymous wrote:


"Never understand the mindset of people who wants to pay more interest so they can deduct it come tax time... "


This is a point our accountant often makes to us.

Why give it to the government when we can give it to the bank? That will be better for the country, right?

"Never understand the mindset of people who wants to pay more interest so they can deduct it come tax time... "


This is a point our accountant often makes to us.

We just went with a 15 year fixed at 3.0 for a $450,000 mortgage. Over the life of the mortgage a 30 year fixed at 3.5 for the same amount with us making extra payments (to make our monthly payment the same for both) would cost us around $25,000 more in interest. The 30 year would have been paid off in just under 16 years. The pros of the 30 year would be the flexibility of having a lower req'd payment, if a change occurs. The con, of course, is the additional cost. We have pretty stable jobs and could make the payment work on either of our salaries, so we went for the 15 year.

I prefer voluntary prepayment so you don't raise your monthly "nut"... get a 30 yr. and pay it off in 15 or 20 or whatever you want with monthly principal prepayments.

Anonymous wrote:

Anonymous wrote:Thinking about refinancing our 600k loan from a 30 year fixed to a 15-year fixed mortgage with a nice low rate (3%). I think we can swing the extra monthly amount without a problem. I recognize that in 15 years we'll lose the mortgage deduction, but the rate seems great, and if we move before then we'll make more money on the house. What am I missing? Is this a huge mistake?

You'll lose the mortgage interest deduction long before 15 years at the rate you'll pay down equity.

The biggest thing is you're on the hook for that bigger payment. You could get a 30 year (with a slightly higher rate) and treat it as a 15-year and still have the safety net of lower required monthly payments.

Never understand the mindset of people who wants to pay more interest so they can deduct it come tax time...

We did it 11 years ago and I'm so glad we did. Our loan will be paid off just as DS1 starts college, freeing up money to pay college tuition. We have saved a lot for college, but having no mortgage payment will be huge in terms of financial breathing room.

I'll add that my DH has developed a chronic illness and it gives me great peace of mind to think that if he becomes disabled, having no mortgage payment means that we will be ok and that I can support the family on my own.

Anonymous wrote:Thinking about refinancing our 600k loan from a 30 year fixed to a 15-year fixed mortgage with a nice low rate (3%). I think we can swing the extra monthly amount without a problem. I recognize that in 15 years we'll lose the mortgage deduction, but the rate seems great, and if we move before then we'll make more money on the house. What am I missing? Is this a huge mistake?

Go for it! It's like forced savings. However, we were in the position of being able to pay even at the 15 year rate on one income, and having two, so only you know how tight it would be.

Anonymous wrote:

You could get a 30 year (with a slightly higher rate) and treat it as a 15-year and still have the safety net of lower required monthly payments.

How do you do this?

Just pay additional principal.

We refinanced several times, and the first time or two we went with the 30 year but paid off add'l principal on the theory that we could use the add'l flexibility. Eventually we calculated how much the flexibility was costing us (the shorter loans usually have lower interest rates) and decided that our jobs were stable enough, and the alternatives for our money were lousy enough, that it wasn't worth it (for us it worked out to be about an extra year of mortgage payments).

You could get a 30 year (with a slightly higher rate) and treat it as a 15-year and still have the safety net of lower required monthly payments.

How do you do this?

Anonymous wrote:Thinking about refinancing our 600k loan from a 30 year fixed to a 15-year fixed mortgage with a nice low rate (3%). I think we can swing the extra monthly amount without a problem. I recognize that in 15 years we'll lose the mortgage deduction, but the rate seems great, and if we move before then we'll make more money on the house. What am I missing? Is this a huge mistake?

You'll lose the mortgage interest deduction long before 15 years at the rate you'll pay down equity.

The biggest thing is you're on the hook for that bigger payment. You could get a 30 year (with a slightly higher rate) and treat it as a 15-year and still have the safety net of lower required monthly payments.

We had that same choice twice this year. What made us go for the 30-year each time was the flexibility. Our original mortgage payment totaled about $5100 in two loans, and we had been paying that off for seven years. We refinanced into one loan in the spring that cut the payment down to $3700 for 30 and about what we had been paying for the 15. We were loathe to start over at 30 more years, and could still pay what we always had, but having been through a recent financial upheaval, we knew that having the option for the lower amount when times were tough was the better move for us. And while we're in a good place, we are still paying $5100 every month with the remainder going directly to principal. Calculations told us that if we do that every month we'll pay it off in 15 years anyway.

We financed again a couple of months ago and now it's down to $3300. Made the same decision again and are happy with it. If you are disciplined enough to make the extra payments you cut a ton of interest and a lot of time off the life of the loan.

Thinking about refinancing our 600k loan from a 30 year fixed to a 15-year fixed mortgage with a nice low rate (3%). I think we can swing the extra monthly amount without a problem. I recognize that in 15 years we'll lose the mortgage deduction, but the rate seems great, and if we move before then we'll make more money on the house. What am I missing? Is this a huge mistake?