Comments on: The Great Debate: 30-Year Mortgage vs. 15-Year Mortgage

By: matt

matt — Mon, 10 Aug 2009 16:42:17 +0000

MSG,
If you double your payment on a 30 year loan, it won’t be payed off in 15 years. It will take about 6 years.

By: MSG

MSG — Mon, 27 Jul 2009 17:46:24 +0000

I always go for 30-year mortgage. If you want, you can double up and pay off in 15 years, but it’s your call, not the banks. Secondly, the interest allows other tax write-offs, so the effective interest is lowered. And it’s cheap money – easy to make more than the effective 4 to 5 % interest rate in many investments.

By: Randy

Randy — Mon, 27 Jul 2009 14:57:33 +0000

One thing that helped me decide on the 30 yr is that I know I had plans to invest more in upgrades to the house and property, so, the extra cash was useful. In the end, I’ll probably break even by getting a higher price if/when I sell, and, live in a nicer house than I bought.

By: Audrey

Audrey — Sun, 26 Jul 2009 21:04:43 +0000

My take on the question is neither the 15 year or the 30 year repayment mortgage would be right for me. This is because my mortgages are all Buy to Let loans. The tenants pay rent which covers all the interest payments to the bank plus I get paid a cashflow on top. I actually EARN MONEY from ‘my’ houses and I never even own them! With time their capital value increases. Even in the credit crunch their capital value is worth more than the loans on them. Eventually if I need to realise the cash I will sell them, pay back the loans and have a good pot of money to retire on after taxes have been paid. The money I invested to purchase them is minimal and is creating wealth over time. I can take equity out to buy another one should capital values increase enough to do so. To me that is a no brainer.

By: Howard

Howard — Thu, 16 Jul 2009 20:30:19 +0000

FINANCIALLY, no question a 15 year is better as long as you can make the payments. The benefit of the 30 year is you can afford more home & arguably a “better” lifestyle.

The other benefit of the 15 year that I believe was missed above is the 2nd 15 years where you would have been putting toward your mortgage you can now invest/save 100%.

By: David McCoy

David McCoy — Wed, 15 Jul 2009 05:05:01 +0000

As stated before a 30 year is much better and if one will make an extra payment now and then you will be surprised at how fast you will be able to pay off the debt. The banks are counting on you not doing that because most everyone finds if difficult to disipline themselves and they make the money.

By: ira kellman

ira kellman — Tue, 14 Jul 2009 01:27:43 +0000

The spread between a 15 and 30 isn’t as big as it looks because the 30 carries a much higher percentage of tax deductility

By: Wes Bridel

Wes Bridel — Sun, 12 Jul 2009 19:23:59 +0000

Thanks for the article. You hit on a key point without going into much detail on "Spending Habits". For most people, having a 15yr Mortgage is probably better because they would otherwise spend the difference and have nothing to show for it. However, for those with discipline and the desire to steward their money well, I haven't found a client yet who didn't see that a 30yr fixed mortgage was better than a shorter one. We'll go into this in much more detail on the Kingdom Calling Blog, but let me throw out a couple quick points. As you mentioned, if you invest the money wisely that you saved each month w/ the 30 yr Mortg. you should easily outperform the money saved in the shorter mortgage. If your goal is to own your home free and clear, you would be able to pay it off in 10-14 years depending on how you invested it. The fact that we can get such amazingly low long term interest rates (which are tax deductible) right now is astounding. there's a very strong chance that we will be entering a period of much higer interest rates and inflation in the coming years. If this is the case, one way to counteract the government's foolishness is to take the banks money locked in at this low rate and put yours to work somewhere else where the value of your dollars are not deteriorating.

By: Affacturage

Affacturage — Sat, 11 Jul 2009 09:40:28 +0000

Let’s face it: despite many people’s protestations to the contrary, too many folks have an automatic trust of government. When there is a problem, many of us don’t like to think of government as the problem but as the solution. Add to that the near phobia that many have about economics as business and what do we get? Pretty much what we have now: a government going billions of dollars IN debt in attempts to get the economy OUT of debt, We get a government doing such idiotic things as bailing out companies for whom bankruptcy is imminent and buying up banks.

By: 2Tony

2Tony — Fri, 10 Jul 2009 18:19:40 +0000

As a Certified Financial Planner, I typically advise my clients against 15 year mortgages. Whether it is over 15 years or 30, do you think you can find an investment that will provide an average annual return greater than 4.5%? (This is a ballpark average “net” cost of your mortgage, when considering the tax-deduction of the interest expense). The opportunity cost may be earning an 8% return with the additional payments you’re making (not to mention the flexibilty of your payments, or ability to repay your loan with devalued dollars, as we experience inflation). If your goal is to pay the house off early, save those add’l payments, and with the arbirtage you earn, you might be able to pay it off in 12 years instead.