Comments on: Comparing the 15-year and 30-year Mortgage http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/ The blog of the free, simple personal finance solution. Track all your spending automatically, find the best deals, save more money. And save the world. Wed, 06 Feb 2013 11:28:17 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Lasia http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-126434 Lasia Thu, 17 Nov 2011 07:49:15 +0000 http://www.mint.com/blog/?p=28363#comment-126434 What is NPV? What is NPV?

]]> By: UltimateSmartMoney http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-122856 UltimateSmartMoney Fri, 14 Oct 2011 01:09:56 +0000 http://www.mint.com/blog/?p=28363#comment-122856 I ended up doing 30 year loan because I could not afford 15 years. I really hate paying this kind of big interests but I have no choice for buying a house. Before you make the extra payments, make sure you really think about the money you are sending your mortgage company. This is because you will never see that money again. That's why you should stick to paying only the monthly payment and stash your savings in investment fund or money market. You just never know when you will be needing that extra cash. I ended up doing 30 year loan because I could not afford 15 years. I really hate paying this kind of big interests but I have no choice for buying a house. Before you make the extra payments, make sure you really think about the money you are sending your mortgage company. This is because you will never see that money again. That’s why you should stick to paying only the monthly payment and stash your savings in investment fund or money market. You just never know when you will be needing that extra cash.

]]> By: Sammy http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-122292 Sammy Sat, 08 Oct 2011 08:28:45 +0000 http://www.mint.com/blog/?p=28363#comment-122292 Anne Do not worry. The logic in the article is kinda flawed and does not talk about inflation. Think about all that you could buy for $10, say 25-30 years ago... Now, to buy that same stuff, you would have to spend at least $20 - $25, yes? Well, same goes for your your 30 year fixed rate mortgage - you may be paying $790 a month, but it's real value is actually closer to 350-400. Also, what would you do with the amount you save every month v/s a 15 year? Buy TIPS - these are inflation protected and actually rise in value :) Cheers Sammy Anne
Do not worry. The logic in the article is kinda flawed and does not talk about inflation. Think about all that you could buy for $10, say 25-30 years ago… Now, to buy that same stuff, you would have to spend at least $20 – $25, yes? Well, same goes for your your 30 year fixed rate mortgage – you may be paying $790 a month, but it’s real value is actually closer to 350-400.

Also, what would you do with the amount you save every month v/s a 15 year? Buy TIPS – these are inflation protected and actually rise in value :)
Cheers
Sammy

]]> By: sararigsby123 http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-117277 sararigsby123 Sat, 24 Sep 2011 09:39:38 +0000 http://www.mint.com/blog/?p=28363#comment-117277 Despite low mortgage rates, refinancing activity has been slow and experts believe consumers seem to be ignoring rate reductions because they don’t feel like they’ll qualify for good deals, for them a place to check is "123 Refi" online Despite low mortgage rates, refinancing activity has been slow and experts believe consumers seem to be ignoring rate reductions because they don’t feel like they’ll qualify for good deals, for them a place to check is “123 Refi” online

]]> By: Taylor Braun-Jones http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-117250 Taylor Braun-Jones Sat, 24 Sep 2011 01:48:43 +0000 http://www.mint.com/blog/?p=28363#comment-117250 This is a poor comparison of 15- and 30-year mortgages. How can you talk about the pros and cons without mentioning opportunity costs? This is a poor comparison of 15- and 30-year mortgages. How can you talk about the pros and cons without mentioning opportunity costs?

]]> By: Anne http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-117247 Anne Sat, 24 Sep 2011 00:37:36 +0000 http://www.mint.com/blog/?p=28363#comment-117247 So, what should one do if one already has a 30-year fixed rate mortgage? So, what should one do if one already has a 30-year fixed rate mortgage?

]]> By: Nathan http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-117213 Nathan Fri, 23 Sep 2011 16:21:23 +0000 http://www.mint.com/blog/?p=28363#comment-117213 Someone should tell Michael about NPV. Someone should tell Michael about NPV.

]]> By: Elliot http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-117212 Elliot Fri, 23 Sep 2011 16:13:20 +0000 http://www.mint.com/blog/?p=28363#comment-117212 This has got to be the worst argument for a 15 vs 30 year mortgage I have ever read!!! First, if you are going to add a tax deduction in one scenario (15 year) you really should illustrate the 30 year as well for a fair and even comparison. Secondly, you have to assume even cash flows. If you can afford the larger payment then you need to illustrate what would the home buyer be doing with those funds if they weren't making additional payments. I would assume they would invest those dollars. It would behoove you to run an actual differential and see where they net out. Lastly, you don't address liquidity. A distressed home owner who makes additional payments has no way of accessing that money, where as some one who saved or invested in a side fund will have immediate access to their money. If you are going to encourage a 15 year mortgage you should also be recommending having a HELOC in case they need to access that money. This has got to be the worst argument for a 15 vs 30 year mortgage I have ever read!!! First, if you are going to add a tax deduction in one scenario (15 year) you really should illustrate the 30 year as well for a fair and even comparison. Secondly, you have to assume even cash flows. If you can afford the larger payment then you need to illustrate what would the home buyer be doing with those funds if they weren’t making additional payments. I would assume they would invest those dollars. It would behoove you to run an actual differential and see where they net out. Lastly, you don’t address liquidity. A distressed home owner who makes additional payments has no way of accessing that money, where as some one who saved or invested in a side fund will have immediate access to their money. If you are going to encourage a 15 year mortgage you should also be recommending having a HELOC in case they need to access that money.

]]> By: Brad http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-117210 Brad Fri, 23 Sep 2011 15:54:06 +0000 http://www.mint.com/blog/?p=28363#comment-117210 I set my mortgage up for 30 years thinking that if my employment status changed for the worse, that I would have some leeway with a smaller payment. I then pay extra against the principal every month. According to my amort.xls if I take the monthly payment difference between the 30 and 15 year loans ($294) and apply it against the principal every month on a 30 year loan I will end up paying $40,709 total interest for the loan. If I put the same values in for a 15 year loan without paying any additional principal the total interest comes out at $42,343. I believe that I am saving $1,634 while keeping my liability lower. I don't guarantee my maths, also; 100k, 5%, Taxes $200, Ins $75, PMI $40 until 80k. I set my mortgage up for 30 years thinking that if my employment status changed for the worse, that I would have some leeway with a smaller payment. I then pay extra against the principal every month.

According to my amort.xls if I take the monthly payment difference between the 30 and 15 year loans ($294) and apply it against the principal every month on a 30 year loan I will end up paying $40,709 total interest for the loan. If I put the same values in for a 15 year loan without paying any additional principal the total interest comes out at $42,343.

I believe that I am saving $1,634 while keeping my liability lower.

I don’t guarantee my maths, also; 100k, 5%, Taxes $200, Ins $75, PMI $40 until 80k.

]]> By: DB http://www.mint.com/blog/goals/comparing-the-15-year-and-30-year-mortgage-092011/comment-page-1/#comment-117207 DB Fri, 23 Sep 2011 15:12:01 +0000 http://www.mint.com/blog/?p=28363#comment-117207 You compare the after tax cost of the 15 year mortgage to the pre-tax cost of the 30 year mortgage. This is a very misleading comparison as the 30 year mortgage has the same tax benefit. Also, due to the amortization your tax benefit will decrease over time so the $538 after-tax payment you mention will rise over the life of the loan. You compare the after tax cost of the 15 year mortgage to the pre-tax cost of the 30 year mortgage. This is a very misleading comparison as the 30 year mortgage has the same tax benefit.

Also, due to the amortization your tax benefit will decrease over time so the $538 after-tax payment you mention will rise over the life of the loan.

]]>