Anonymous
07/18/2013 14:31
Subject: Re:15 vs 30 years mortgage
If you take 14:09's advice (what we did also, for various reasons), go here and play around:
http://www.hsh.com/lowerrate-prepayment-calculator.html
http://www.hsh.com/prepayment-refinance-calculator.html
Both calculators have some interesting outputs to consider.
http://www.hsh.com/lowerrate-prepayment-calculator.html
http://www.hsh.com/prepayment-refinance-calculator.html
Both calculators have some interesting outputs to consider.
Anonymous
07/18/2013 14:09
Subject: Re:15 vs 30 years mortgage
You don't get the screamingly better rate with the 20-year, usually.
This is exactly how we decided - I've posted this on several other threads on this same exact issue. OP, you should do a search. We chose both times we refinanced in the past year to go for the 30-year for the flexibility, having gone through recent financial upheaval. There is something major to be said about keeping your monthly nut low. Meanwhile, we are paying $5K/month on a $3300/month PITI, which will turn it into a 15-year anyway. But we don't have to do that if we have increased expenses later which make that harder.
I haven't run the numbers but whatever that difference is, is the price you pay for the considerable flexibility (IMO) of not being locked into the higher payment of a 15 yr. mortgage. Any number of things can happen to put the squeeze on finances and unless you're comfortably over the line (and OP says the 15 yr. would be tight), then I generally prefer to take the 30 yr. and pay it off in 15 (and have the flexibility to change payments down (or up) if events intervene).
This is exactly how we decided - I've posted this on several other threads on this same exact issue. OP, you should do a search. We chose both times we refinanced in the past year to go for the 30-year for the flexibility, having gone through recent financial upheaval. There is something major to be said about keeping your monthly nut low. Meanwhile, we are paying $5K/month on a $3300/month PITI, which will turn it into a 15-year anyway. But we don't have to do that if we have increased expenses later which make that harder.
Anonymous
07/18/2013 13:07
Subject: Re:15 vs 30 years mortgage
Why not do a 20 yr and see if that takes off the squeeze a bit??
Anonymous
07/18/2013 12:49
Subject: 15 vs 30 years mortgage
Meant to write...
You can also run the numbers and calculate what making extra payments would mean to total amount of interest that you would pay over the course of the loan. We faced a similar decision and went for the 30 year loan but are paying it off at a much faster clip. You have a lot more flexibility that way.
You can also run the numbers and calculate what making extra payments would mean to total amount of interest that you would pay over the course of the loan. We faced a similar decision and went for the 30 year loan but are paying it off at a much faster clip. You have a lot more flexibility that way.
Anonymous
07/18/2013 12:46
Subject: 15 vs 30 years mortgage
You can also run the numbers and calculate making what making extra payments would do to your rate. We faced a similar decision and went for the 30 year loan but are paying it off at a much faster clip.
Anonymous
07/18/2013 10:30
Subject: 15 vs 30 years mortgage
If you are asking - what is the difference in cost between a 15 year at 3.7% for a $300K mortgage and a 30 year at 4.5% that after 15 years you will pay off the balance...
The 15 year will cost you ~$391K, the 30 year will cost you $473K.
The 15 year will cost you ~$391K, the 30 year will cost you $473K.
Anonymous
07/18/2013 10:26
Subject: Re:15 vs 30 years mortgage
As a PP mentioned, you can run payment calculators (or do it in Excel if you are able to) to calculate the difference. We went from a 30 year at 4.25% to 15 year at 3% and the difference in interest paid over the life of the loan was around 120-130K on a 250K loan amount (rough numbers, don't remember the exact difference but it was definitely six figures).
Anonymous
07/18/2013 10:22
Subject: Re:15 vs 30 years mortgage
Anonymous wrote:We just refi'd to a 15 yr at 2.85% from a 30 yr @ 4.75%. Our monthly payment will be significantly higher but our youngest daughter is going to public K this year, so no more preschool tuition. The difference between our old and new mortgage payment is less than the preschool payment, so we figured we won't "feel" the increased payment at all.
What is really astonishing somehow is when you look at what you will have paid over the life of the mortage. In our case, this is a 300K difference on a 417K loan. In other words, with the 15 year will have paid about $515K over the course of the loan but with the 30 yr, that would be 815K (roughly).
We can afford the mortgage on one salary (my salary). It would be quite a struggle to afford on DH's salary alone (I make 3X what he does). But we have to assume that wouldn't be the case for a sustained period of time. I work for a very stable employer.
But the OP's question is not total cost of a 15 yr. v. a 30 yr. over the life of the loan, it's the diff. in cost between a 15 yr. paid off in 15 vs. a 30 yr. paid off (at a higher interest rate) in 15 yrs.
I haven't run the numbers but whatever that difference is, is the price you pay for the considerable flexibility (IMO) of not being locked into the higher payment of a 15 yr. mortgage. Any number of things can happen to put the squeeze on finances and unless you're comfortably over the line (and OP says the 15 yr. would be tight), then I generally prefer to take the 30 yr. and pay it off in 15 (and have the flexibility to change payments down (or up) if events intervene).
YMMV.
Anonymous
07/18/2013 09:26
Subject: Re:15 vs 30 years mortgage
Anonymous wrote:We just refi'd to a 15 yr at 2.85% from a 30 yr @ 4.75%. Our monthly payment will be significantly higher but our youngest daughter is going to public K this year, so no more preschool tuition. The difference between our old and new mortgage payment is less than the preschool payment, so we figured we won't "feel" the increased payment at all.
What is really astonishing somehow is when you look at what you will have paid over the life of the mortage. In our case, this is a 300K difference on a 417K loan. In other words, with the 15 year will have paid about $515K over the course of the loan but with the 30 yr, that would be 815K (roughly).
We can afford the mortgage on one salary (my salary). It would be quite a struggle to afford on DH's salary alone (I make 3X what he does). But we have to assume that wouldn't be the case for a sustained period of time. I work for a very stable employer.
I wish I have a wife that makes your salary lol.
Anonymous
07/18/2013 08:43
Subject: Re:15 vs 30 years mortgage
We just refi'd to a 15 yr at 2.85% from a 30 yr @ 4.75%. Our monthly payment will be significantly higher but our youngest daughter is going to public K this year, so no more preschool tuition. The difference between our old and new mortgage payment is less than the preschool payment, so we figured we won't "feel" the increased payment at all.
What is really astonishing somehow is when you look at what you will have paid over the life of the mortage. In our case, this is a 300K difference on a 417K loan. In other words, with the 15 year will have paid about $515K over the course of the loan but with the 30 yr, that would be 815K (roughly).
We can afford the mortgage on one salary (my salary). It would be quite a struggle to afford on DH's salary alone (I make 3X what he does). But we have to assume that wouldn't be the case for a sustained period of time. I work for a very stable employer.
What is really astonishing somehow is when you look at what you will have paid over the life of the mortage. In our case, this is a 300K difference on a 417K loan. In other words, with the 15 year will have paid about $515K over the course of the loan but with the 30 yr, that would be 815K (roughly).
We can afford the mortgage on one salary (my salary). It would be quite a struggle to afford on DH's salary alone (I make 3X what he does). But we have to assume that wouldn't be the case for a sustained period of time. I work for a very stable employer.
Anonymous
07/18/2013 08:29
Subject: 15 vs 30 years mortgage
Anonymous wrote:Anonymous wrote:Can you swing the difference in payments? On 1 income?
If yes, go for it. At somepoint it is not a pure financial decision around where can you get the best return.
There is a cash flow perspective of what addedd stress will it put you under in the short term - and what will it mean not to have a payment in the long term.
We went around and around with this a year ago - locked in a 15 YR just over 3% and are thrilled with our choice.
We will own our home when our 2nd starts college. This cash flow will mean a lot b/c I do not expect that we will get aid (other than merit).
If we decided to the 15 years, it will be kind of tight, but we have some saving back it up just in case. I just want to have a clear picture of how much more interest I will have to pay if we decided to go with the 30 years even though we will be paying it off less than 30.
By what you are saying, I think 15 is better i guess. Anybody else?
Its a simple comparison on any mortgage calculator out there:
http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx
Just plug in your numbers, and compare.
Anonymous
07/18/2013 08:05
Subject: 15 vs 30 years mortgage
Anonymous wrote:Can you swing the difference in payments? On 1 income?
If yes, go for it. At somepoint it is not a pure financial decision around where can you get the best return.
There is a cash flow perspective of what addedd stress will it put you under in the short term - and what will it mean not to have a payment in the long term.
We went around and around with this a year ago - locked in a 15 YR just over 3% and are thrilled with our choice.
We will own our home when our 2nd starts college. This cash flow will mean a lot b/c I do not expect that we will get aid (other than merit).
If we decided to the 15 years, it will be kind of tight, but we have some saving back it up just in case. I just want to have a clear picture of how much more interest I will have to pay if we decided to go with the 30 years even though we will be paying it off less than 30.
By what you are saying, I think 15 is better i guess. Anybody else?
Anonymous
07/18/2013 08:02
Subject: 15 vs 30 years mortgage
plot it on a spreadsheet.
Anonymous
07/18/2013 07:34
Subject: 15 vs 30 years mortgage
Can you swing the difference in payments? On 1 income?
If yes, go for it. At somepoint it is not a pure financial decision around where can you get the best return.
There is a cash flow perspective of what addedd stress will it put you under in the short term - and what will it mean not to have a payment in the long term.
We went around and around with this a year ago - locked in a 15 YR just over 3% and are thrilled with our choice.
We will own our home when our 2nd starts college. This cash flow will mean a lot b/c I do not expect that we will get aid (other than merit).
If yes, go for it. At somepoint it is not a pure financial decision around where can you get the best return.
There is a cash flow perspective of what addedd stress will it put you under in the short term - and what will it mean not to have a payment in the long term.
We went around and around with this a year ago - locked in a 15 YR just over 3% and are thrilled with our choice.
We will own our home when our 2nd starts college. This cash flow will mean a lot b/c I do not expect that we will get aid (other than merit).
Anonymous
07/18/2013 07:27
Subject: 15 vs 30 years mortgage
If you gotta choose 15 years at 3.7% vs 30 years at 4.5% for a $300k loan.
I know that we can put an extra $500 bucks to monthly mortgage if we choose the 30 years, so my bottom question is, which one really saving the most money?
I know that we can put an extra $500 bucks to monthly mortgage if we choose the 30 years, so my bottom question is, which one really saving the most money?