Can you get a decent house with a smaller mortgage? Perhaps buy a place in a neighborhood that is likely going up in demand in the future?
Mortgage Term vs. Retirement Date
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Originally Posted By: Mykl
I think the most regretful decision I've made recently is the one to compromise and go with a 30 year mortgage instead of a 15. The reasoning at the time was that if something happened that prevented me from getting it paid off as early as I had intended, that I might need the extra flexibility in my budget to compensate.
That was a fair concern and all, but even though I'm currently paying three times more toward principle every month than the payment requires it still adds quite a few months to my pay off date (close to a year IIRC); interest is fun.
I don't get this part. Yes, there is a difference in the interest rate of 30 vs 15 year loan when everything else is equal. BUT difference is 1/4 point or so and that alone does not explain why you believe it to be such a regretful decision. Are you saying that instead of paying it off in 15 years (on 15 year loan), you will be paying it off in 16 years (if you made payments as if it was 15 year loan) and you will be paying EXTRA 12 PAYMENTS and that is bugging you that much?
I think the most regretful decision I've made recently is the one to compromise and go with a 30 year mortgage instead of a 15. The reasoning at the time was that if something happened that prevented me from getting it paid off as early as I had intended, that I might need the extra flexibility in my budget to compensate.
That was a fair concern and all, but even though I'm currently paying three times more toward principle every month than the payment requires it still adds quite a few months to my pay off date (close to a year IIRC); interest is fun.
I don't get this part. Yes, there is a difference in the interest rate of 30 vs 15 year loan when everything else is equal. BUT difference is 1/4 point or so and that alone does not explain why you believe it to be such a regretful decision. Are you saying that instead of paying it off in 15 years (on 15 year loan), you will be paying it off in 16 years (if you made payments as if it was 15 year loan) and you will be paying EXTRA 12 PAYMENTS and that is bugging you that much?
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Originally Posted By: Vikas
I don't get this part. Yes, there is a difference in the interest rate of 30 vs 15 year loan when everything else is equal. BUT difference is 1/4 point or so and that alone does not explain why you believe it to be such a regretful decision. Are you saying that instead of paying it off in 15 years (on 15 year loan), you will be paying it off in 16 years (if you made payments as if it was 15 year loan) and you will be paying EXTRA 12 PAYMENTS and that is bugging you that much?
I'm not going to go jump off a bridge or anything, I just consider it to be a bit of a misstep.
I'm not on the time-frame you have laid out, mine is tighter, but even over that length of time 12 payments on a house tends to add up to a lot of money. Money I'd have rather placed elsewhere.
I don't get this part. Yes, there is a difference in the interest rate of 30 vs 15 year loan when everything else is equal. BUT difference is 1/4 point or so and that alone does not explain why you believe it to be such a regretful decision. Are you saying that instead of paying it off in 15 years (on 15 year loan), you will be paying it off in 16 years (if you made payments as if it was 15 year loan) and you will be paying EXTRA 12 PAYMENTS and that is bugging you that much?
I'm not going to go jump off a bridge or anything, I just consider it to be a bit of a misstep.
I'm not on the time-frame you have laid out, mine is tighter, but even over that length of time 12 payments on a house tends to add up to a lot of money. Money I'd have rather placed elsewhere.
Originally Posted By: Mykl
even over that length of time 12 payments on a house tends to add up to a lot of money. Money I'd have rather placed elsewhere.
But that was part of the "cost" of having the risk-mitigation of using the 30yr mortgage "just in case" something bad happened. Had something occurred, you might have been happy to have the lower (monthly) payment.
Hindsight is always better than foresight. Not 20/20 but generally better.
even over that length of time 12 payments on a house tends to add up to a lot of money. Money I'd have rather placed elsewhere.
But that was part of the "cost" of having the risk-mitigation of using the 30yr mortgage "just in case" something bad happened. Had something occurred, you might have been happy to have the lower (monthly) payment.
Hindsight is always better than foresight. Not 20/20 but generally better.
Originally Posted By: supton
But that was part of the "cost" of having the risk-mitigation of using the 30yr mortgage "just in case" something bad happened. Had something occurred, you might have been happy to have the lower (monthly) payment.
Hindsight is always better than foresight. Not 20/20 but generally better.
Yup, this is true, and at the time I felt like that added cost was fair. But in reality I have an extremely stable job with good health care benefits so my fears were irrational. That's the reason why I'm kicking myself (gently), because I let fear drive the decision rather than trust my initial, reasonable assessment.
Not the end of the world or even close to it, just a lesson learned.
But that was part of the "cost" of having the risk-mitigation of using the 30yr mortgage "just in case" something bad happened. Had something occurred, you might have been happy to have the lower (monthly) payment.
Hindsight is always better than foresight. Not 20/20 but generally better.
Yup, this is true, and at the time I felt like that added cost was fair. But in reality I have an extremely stable job with good health care benefits so my fears were irrational. That's the reason why I'm kicking myself (gently), because I let fear drive the decision rather than trust my initial, reasonable assessment.
Not the end of the world or even close to it, just a lesson learned.
Fair enough. In my case, I've got a good stable job, good benefits--but during the crunch the company cut pay instead of positions. While I still think buying my house was a bad move the 30yr mortgage was still a good move at that time (actually it was about required). I've since refinanced at 15, as the rates dropped nicely.
15 years tend to have much lower rate than 30 years. If you can afford to pay it off in 15 or sell it before then, I'd take the 15 years every time.
Mine is a 10 years fix and it has a lower rate than 5 or 7 years ARM, and I'm far from retirement.
Mine is a 10 years fix and it has a lower rate than 5 or 7 years ARM, and I'm far from retirement.
Originally Posted By: 99Saturn
Isn't 1/4 point = .25% or am I missing something?
Last time I checked rates when considering refinancing I think the spread was somewhere around .75% to 1% for a 15 yr. versus 30 yr.
Yes, I don't think 15 vs 30 is only .25% difference, or you are doing it wrong.
Some lenders or agents are specialized in certain types of mortgage and you cannot use the same lender to compare.
My 10 years fix is only 2.5% APR, and 30 years fixed on the same loan at the time would have been 4% the lowest, that's a huge difference over 10 years if you are discipline in paying it off in the same time.
Isn't 1/4 point = .25% or am I missing something?
Last time I checked rates when considering refinancing I think the spread was somewhere around .75% to 1% for a 15 yr. versus 30 yr.
Yes, I don't think 15 vs 30 is only .25% difference, or you are doing it wrong.
Some lenders or agents are specialized in certain types of mortgage and you cannot use the same lender to compare.
My 10 years fix is only 2.5% APR, and 30 years fixed on the same loan at the time would have been 4% the lowest, that's a huge difference over 10 years if you are discipline in paying it off in the same time.
The thing about 15 vs 16 (or whatever the numbers happen to be) is that once you reach 14 years, then it will make a huge difference whether you have to pay only for last year or double that. But you have had 14 years to cut that portion down if you had inclination. You could also have refinanced it at lower rate and lower terms on the way down there.
Latest Interest Rate from mortgage broker prospectfgi. Other mortgage brokers may have slightly different rates. Widest spread is between 30 year and 15 year.
$0 - $417,000 Loan Amounts - with 0 points or lender fees
30 Year Fixed @ 3.99% (3.99% APR)
25 Year Fixed @ 3.99% (3.99% APR)
20 Year Fixed @ 3.75% (3.75% APR)
15 Year Fixed @ 3.0% (3.0% APR)
10 Year Fixed @ 2.875% (2.875% APR)
5/1 ARM @ 2.5% (2.5% APR)
7/1 ARM @ 2.875% (2.875% APR)
10/1 ARM @ 3.39% (3.39% APR)
$417,001 - $625,500 Loan Amounts - with 0 points or lender fees
30 Year Fixed @ 4.125% (4.125% APR)
25 Year Fixed @ 4.125% (4.125% APR)
20 Year Fixed @ 3.75% (3.75% APR)
15 Year Fixed @ 3.25% (3.25% APR)
10 Year Fixed @ 3.125% (3.125% APR)
5/1 ARM @ 2.875% (2.875% APR)
7/1 ARM @ 3.25% (3.25% APR)
10/1 ARM @ 3.5% (3.5% APR)
$625,501 - $2,000,000 Loan Amounts - with 0 points or lender fees
30 Year Fixed @ 4.19% (4.19% APR)
15 Year Fixed @ 3.375% (3.375% APR)
5/1 ARM @ 2.875% (2.875% APR)
7/1 ARM @ 3.25% (3.25% APR)
10/1 ARM @ 3.5% (3.5% APR)
$0 - $417,000 Loan Amounts - with 0 points or lender fees
30 Year Fixed @ 3.99% (3.99% APR)
25 Year Fixed @ 3.99% (3.99% APR)
20 Year Fixed @ 3.75% (3.75% APR)
15 Year Fixed @ 3.0% (3.0% APR)
10 Year Fixed @ 2.875% (2.875% APR)
5/1 ARM @ 2.5% (2.5% APR)
7/1 ARM @ 2.875% (2.875% APR)
10/1 ARM @ 3.39% (3.39% APR)
$417,001 - $625,500 Loan Amounts - with 0 points or lender fees
30 Year Fixed @ 4.125% (4.125% APR)
25 Year Fixed @ 4.125% (4.125% APR)
20 Year Fixed @ 3.75% (3.75% APR)
15 Year Fixed @ 3.25% (3.25% APR)
10 Year Fixed @ 3.125% (3.125% APR)
5/1 ARM @ 2.875% (2.875% APR)
7/1 ARM @ 3.25% (3.25% APR)
10/1 ARM @ 3.5% (3.5% APR)
$625,501 - $2,000,000 Loan Amounts - with 0 points or lender fees
30 Year Fixed @ 4.19% (4.19% APR)
15 Year Fixed @ 3.375% (3.375% APR)
5/1 ARM @ 2.875% (2.875% APR)
7/1 ARM @ 3.25% (3.25% APR)
10/1 ARM @ 3.5% (3.5% APR)
JHZR2
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Originally Posted By: Mykl
I think the most regretful decision I've made recently is the one to compromise and go with a 30 year mortgage instead of a 15. The reasoning at the time was that if something happened that prevented me from getting it paid off as early as I had intended, that I might need the extra flexibility in my budget to compensate.
That was a fair concern and all, but even though I'm currently paying three times more toward principle every month than the payment requires it still adds quite a few months to my pay off date (close to a year IIRC); interest is fun.
Originally Posted By: Pop_Rivit
Unless you have a tremendous amount already invested for retirement, I can't imagine any retirement scenario that includes mortgage payments. But if you had a tremendous amount invested for retirement, you probably wouldn't be asking this question.
Get a 15 year (or less) mortgage, and then make extra payments each year in order to pay it down quickly.
Both quoted for truth.
I think the most regretful decision I've made recently is the one to compromise and go with a 30 year mortgage instead of a 15. The reasoning at the time was that if something happened that prevented me from getting it paid off as early as I had intended, that I might need the extra flexibility in my budget to compensate.
That was a fair concern and all, but even though I'm currently paying three times more toward principle every month than the payment requires it still adds quite a few months to my pay off date (close to a year IIRC); interest is fun.
Originally Posted By: Pop_Rivit
Unless you have a tremendous amount already invested for retirement, I can't imagine any retirement scenario that includes mortgage payments. But if you had a tremendous amount invested for retirement, you probably wouldn't be asking this question.
Get a 15 year (or less) mortgage, and then make extra payments each year in order to pay it down quickly.
Both quoted for truth.
Take whichever offers the lower rate.
In most cases, this will be the shorter term loan.
Servicing the debt will be more comfortable during your working years, since you'll certainly have more income, but it's the cost of money that should determine your term.
But who am I to say, since we paid off our house more than fifteen years ago.
In most cases, this will be the shorter term loan.
Servicing the debt will be more comfortable during your working years, since you'll certainly have more income, but it's the cost of money that should determine your term.
But who am I to say, since we paid off our house more than fifteen years ago.
I'm on a 30 yr loan started 1/2011. I put 20% down and 33 yr old at the time. Now, 3 yrs 4 months later. I have 50% equity in the house. I've been paying have auto payments every two weeks. Bank of America sent me a threatening letter to stop paying monthly payments in advance. They said I can prepay, but not pay my monthly note in advance. I stopped doing that last September. My next payment is due 9/2015. I still prepay half the mortgage note every two weeks to knock down the principal. I'll keep doing this until I have a second baby or have to get a new car.
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