I’ve never blogged before. OK so this is my third post, but it’s been written as if it was my first. My first blog post was only 2 days ago and I think it went pretty well. Time will tell. I takes a lot of time to put up a website even one as “simple” as this one. There are a lot of hidden details behind the curtain.
I am not one who would call himself a writer. It comes hard to me. Give me math any day! But there are things that people need to know when dealing with mortgages. Buying a house is the single most expensive purchase most people will ever be involved in. Many times the professionals that do this day in and day out forget that this is an important transaction that will affect you for the next 15 to 30 years. One of my sons will probably be buying a home in the next 3 to 5 years and even though he is in banking, that doesn’t change the fact that you still want to take your time and make sure that your are making a great decision.
30 year vs 15 year loans
If you can afford a 15 year loan – do it. There rates are slightly lower that a 30 year loan, but the time difference is huge. 15 years less time makes a HUGE difference in the amount of interest that you will pay. Depending on the amount of the loan that savings could be hundreds of thousands of dollars. That’s money you don’t have to earn, pay taxes on and then give away to your mortgage company.
So yes, the payment is higher on a 15 year loan. It can be a big difference too. Many people say that they will get the 30 year loan and make a 15 year loan payment, just so they can fall back to a lower payment if things get tight. I get it, but that rarely ever happens. There are other options like getting a 20 or 25 year loan too, but those are generally at the 30 year pricing – so it’s just a shorter term without the better rate.
In the end, whatever you decide has to work for you in the long run. If you take the leap and go for the 15 year loan – it will hurt a bit for the first year. It hurts with the 30 year loan too – I remember! But it get easier with each passing year. Every year you will get a raise which makes that payment just a little easier until soon you don’t even think about it. But 15 years just flies by and the next thing you know – your home is paid off!! Congratulations!!
Now how can you live with your home paid off? You now have options – retire early – or maybe only one of you have to work. Would you travel more, invest differently, maybe buy an investment property? Options.
