Poll

What loan term would you select?

Fixed 30 yr @ 5%
Fixed 20 yr @ 4.5%
Fixed 15 yr @ 4.125%
Fixed 10 yr @ 3.75%
5/5 yr ARM @ 3.75%

Author Topic: Mortgage Loan Term 10, 15, or 30  (Read 870 times)

Steeze

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Mortgage Loan Term 10, 15, or 30
« on: October 29, 2018, 01:50:09 PM »
Assuming the payments are comfortably within your budget regardless of term, which term would you choose?
First home, primary residence, 20%+ down

Jon Bon

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #1 on: October 29, 2018, 02:47:30 PM »
I almost always go 30 year fixed.

I want extra cash available in case I need it. A 30 year mortgage can always be turned into a 15 year after the fact just by paying extra on the principal but you dont have to do that.

I like the flexibility... YMMV

thd7t

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #2 on: October 29, 2018, 02:52:36 PM »
I looked at the 15 year and 30 year options with a $200k mortgage.
30 year: $1074
15 year: $1492.

If you pay the 15 year mortgage at $1492/month for 15 years, you get a paid off house in 15 years.

If you pay the 30 year mortgage at $1074/month for 15 years, you've paid off $65k, but you can invest $418 monthly.  At 7% (a low but realistic rate for a diverse index fund), you would have $132k saved.  This puts you in pretty good shape and by the end of 30 years, you would be way ahead.

30 year mortgage and invest the difference.  You're also protected against loss of income, because you end up with greater savings.

RWD

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #3 on: October 29, 2018, 03:13:49 PM »
Depends how long I planned to own the house. 30 year makes the most sense if you're going to stay there a long time and invest the difference. 10 or 15 year works better if you're going to be moving again with 5-10 years.

tralfamadorian

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #4 on: October 29, 2018, 04:28:19 PM »
I almost always go 30 year fixed.

I want extra cash available in case I need it. A 30 year mortgage can always be turned into a 15 year after the fact just by paying extra on the principal but you dont have to do that.

I like the flexibility... YMMV

+1

It's much lower risk to take the longer amortization

monarda

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #5 on: October 31, 2018, 09:03:39 AM »
If the shorter term interest rate is low enough and I don't have plans for the cash, I would do that and take a HELOC later in the unlikely event that needed.

I have a 12 year 2.99% first loan, and a small HELOC (that currently has a 1.99% promotional rate).

ketchup

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #6 on: October 31, 2018, 09:11:16 AM »
30 year fixed all day.

Goldielocks

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #7 on: October 31, 2018, 03:28:50 PM »
You have a typo.  The 5/5 ARM should be 1% cheaper than the 10 year fixed rate.

Steeze

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #8 on: October 31, 2018, 09:39:03 PM »
You have a typo.  The 5/5 ARM should be 1% cheaper than the 10 year fixed rate.

https://www.bethpagefcu.com/rates-calculators.aspx?src=top_nav#tab5

^was going off of this bank's quoted rates at the time (5/5 and 10 yr are the same).

Goldielocks

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #9 on: November 01, 2018, 01:12:53 AM »
You have a typo.  The 5/5 ARM should be 1% cheaper than the 10 year fixed rate.

https://www.bethpagefcu.com/rates-calculators.aspx?src=top_nav#tab5

^was going off of this bank's quoted rates at the time (5/5 and 10 yr are the same).
The posted rate is not the negotiated rate!

Steeze

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #10 on: November 01, 2018, 09:48:40 AM »
Advice on negotiating the rate down?

thd7t

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Re: Mortgage Loan Term 10, 15, or 30
« Reply #11 on: November 01, 2018, 11:12:09 AM »
Advice on negotiating the rate down?
Get quotes from other lenders.