Has anyone done the math on whether it's wise to go for 15 year fixed to save the interest paid over the lifetime of the loan? Also, how does the mortgage interest deduction factor in? Loan Amount $750k, Home value $1M
Take the 30 year and prepay principal. You can still pay it off in 15 years and will save a ton on interest. The reason to do this is flexibility. If something happens (perhaps you or significant other loses job or quits) you’ll likely still be able to afford the mortgage.
I just refinanced to 15 year... but my balance is about $580k... I moved from 3.75 30 year fixed to 2.875% 15 year fixed. I did the math... ping me your email id and I can share you the excel sheet... the cost savings on interest are significant... for $750k the interest you pay over the lifetime of the loan should be about $400k roughly at 3.75% interest... compared to $180k at 3% 15 year...
Yea but the opportunity cost of the money you dumped into equity is pretty high. The rational approach is to invest the remainder of your money which will typically out grow how much interest you pay over the life of the loan.
True... you pay some off in debt... invest some in sandp 500 stocks... invest some in bonds... diversification is the key term here... and btw is there a guarantee that your return on investment elsewhere will be greater than interest you pay over the lifetime of the loan?
DMed you
If the 30 year rate is 3.25 and the 15 year is 3.15... why bother with 15
30 is better for 3 reasons: 1. Flexibility 2. Flexibility 3. Flexibility If inflation happens you score on a 30 year loan because your last payments are peanuts. If you lose your job, move, want to buy another place, etc, 30 year is better.
If you understand how the interest component is nonlinearly applied overtime you’d realize that adjustable rate mortgage is optimal under certain scenarios
But that gives minimum flexibility - if there is a recession and you lose your job and it adjusts up, you get screwed.
@instasize - I think the argument here is exclusively for 30 vs 15. Arm is not the topic here. But yes I agree with ur statement as well (which is also because of the opportunity cost of the interest savings).
2024 Presidential Election
Yesterday
1396
Biden to hand out green cards to 4000 illegals per year
Tech Industry
Yesterday
472
Best LCOL or MCOL city?
Tech Industry
6h
479
Chloe Shih: "I’m the highest performer on every team, hands down"
Tech Industry
Yesterday
1285
Enraged that kids prefer KPop to Bollywood. Installed cams in their rooms.
If you’re going to live their own it for 30 years Then 30 year fixedit’s better. If you’re planning on being there for a short time then go for an adjustable