30 year fixed vs 15 year fixed? Refinance

Dec 9, 2019 21 Comments

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

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TOP 21 Comments
  • Capital One bsetcg
    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.
    Dec 9, 2019 5
    • Microsoft salesbro
      Thanks IBM. It could make sense to refi and stay with a 15 though, right?
      Jan 2
    • IBM / Data bbWI22
      I would assume 15 year fixed rates would be much lower than 3.4, which would make it worth it
      Jan 2
  • AT&T MsdR32
    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.
    Dec 9, 2019 4
    • Instasize woqe
      That’s why I didn’t say flexibility, but to imply 30 years is always optimal is ignorant. I’ll let you figure it out
      Dec 9, 2019
    • NVIDIA / Eng
      Penaldo

      NVIDIA Eng

      PRE
      Nokia
      Penaldomore
      How is 30 better if you move or buy another place?
      Dec 9, 2019
  • Salesforce horsepla
    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.
    Dec 9, 2019 0
  • Instasize woqe
    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
    Dec 9, 2019 0
  • Facebook public2
    If the 30 year rate is 3.25 and the 15 year is 3.15... why bother with 15
    Dec 9, 2019 3
    • NVIDIA / Eng
      Penaldo

      NVIDIA Eng

      PRE
      Nokia
      Penaldomore
      15 is even lower...
      Dec 9, 2019
    • Facebook public2
      Barely these days now that short and long terms rates are flat. When a 15 was a discount it was worth considering of course
      Dec 9, 2019
  • NVIDIA / Eng
    Penaldo

    NVIDIA Eng

    PRE
    Nokia
    Penaldomore
    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?
    Dec 9, 2019 1
  • Cisco BlissFull
    @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).
    Dec 9, 2019 0
  • NVIDIA / Eng
    Penaldo

    NVIDIA Eng

    PRE
    Nokia
    Penaldomore
    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...
    Dec 9, 2019 0

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