Need Advice

[MMM333]

I am 35 year Old, Twin Kids 18 Months.

Investments:
2 ROTH IRA Accounts: Maxing out from past 3 years. 
1 Brokerage Account: Monthly contribution for Kids Education.
NRE Accounts (Account with Indian bank): Fixed 6.7 Returns on FDs
401k Started this year: - 6% company Match – Investment Vanguard Fund
HAS account form this year: money spent on medical reasons.

Investments All accounts:
SCHX 70% and 10 REIT Stock, 20% Individual Stocks – Total Return ~ 10% Yearly

95% I don’t sell any stocks/ETFs/Funds. I am learning by making mistakes and reading. 

With that, I have below questions.

1.   I am buying house 300K. Should I take 15 or 30 year mortgage term?
a.   I know lots of discussion on this but I am planning to get FI when I am 50. If I take 30 year then how am I going to ger FI? That’s why I need advise. & also, I can support kids education if I don’t have any more mortgage payments.
b.   Pre approved rate 3.25 15 year (1800/month) and 3.85 30 year (2400/month)
2.   Saving for kids education & from NC state. Which education saving account is better? I am reading that education saving accounts not offering good investment options. If I put that money on brokrage account and buy SCHX or MFund for 18 year than it will give me average 9-10% returns. Any thoughts?

Thank you,

[JayKay]

Pre approved rate 3.25 15 year (1800/month) and 3.85 30 year (2400/month)

Are you sure about these monthly payment numbers?  Usually a 30 year has a lower monthly payment, even if it has a slightly higher rate.

[accolay]

Welcome aboard.

I think you want to write a case study: https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/

Also, I'll be the grammar dick- I think you meant "Advice."

[CowboyAndIndian]

1.   I am buying house 300K. Should I take 15 or 30 year mortgage term?

If you can afford the monthly payment, get the 15 year loan. You usually get a lower interest rate and also you will pay substantially lower interest thru the period of the loan. Check out any loan ammortization tool and see the sum total of interest  payments at the end of the loan.

2.   Saving for kids education & from NC state. Which education saving account is better? I am reading that education saving accounts not offering good investment options. If I put that money on brokrage account and buy SCHX or MFund for 18 year than it will give me average 9-10% returns. Any thoughts?

Use a 529 plan to save for college. The advantage of a 529 plan is that the growth of the account will be tax free when you use the money for a qualified education purpose (tuition, books etc).

There are many 529 plans, pick one which has good funds (e.g Vanguard) and has low expenses. My state, NJ, used to have a horrible 529 and so I picked the Utah state 529 plan(uesp.org). You may get some breaks with your state tax if you put money in your state's 529 plan, but please check out what the expenses are.

[MMM333]

@JayKay : Yes those are monthly numbers. Below is more information from bank. Let me know if i am missing anything.

loan amount would be $271,358
 
Using 15 year fixed loan...rate of 3.125% - makes principal and interest payment $1890.  Add taxes (estimate $230) add home owners insurance (estimate $50) and add mortgage insurance (PMI estimate $68)
 
So – all in would be only $2238
 
30 year fixed at 3.875% would be $1276 – taxes and insurance ($280) and PMI ($93) – all in total of about $ 1649

@accolay: I will need to gather more information for case study.

@CowboyAndIndian: Ok I will look into amortization tool. Ok. I will look into Uthan State 529 and other state.

[JayKay]

@JayKay : Yes those are monthly numbers. Below is more information from bank. Let me know if i am missing anything.

Ok, so it looks like you had things backwards then.  You said your 30 year was about 2400 and your 15 year was 1800, which seemed wrong.  Your new amounts look correct.

Anyway, my take on it is usually to go with the 30 year rather than the 15 year unless the rate difference is quite large (which yours isn't).  Here's the reason:

If you were to get a 30 year and pay it off in 15 years, calculations I've seen show the amount of interest paid is nearly the same as just getting a 15 year.  But the critical difference is that you've got wiggle room.  If you've been paying extra in your 30 year but then your income were to fall or disappear because of disaster, illness, etc, you could reduce your monthly payments with a 30 year, which could make a huge difference in your well-being.  But with a 15 year, you're stuck with that higher payment regardless, which could put you into a much worse position.

That's why I always go 30 year, not 15.  It gives you options.

[MMM333]

Ok thank you

[MMM333]

2.   Saving for kids education & from NC state. Which education saving account is better? I am reading that education saving accounts not offering good investment options. If I put that money on brokrage account and buy SCHX or MFund for 18 year than it will give me average 9-10% returns. Any thoughts?

Use a 529 plan to save for college. The advantage of a 529 plan is that the growth of the account will be tax free when you use the money for a qualified education purpose (tuition, books etc).

There are many 529 plans, pick one which has good funds (e.g Vanguard) and has low expenses. My state, NJ, used to have a horrible 529 and so I picked the Utah state 529 plan(uesp.org). You may get some breaks with your state tax if you put money in your state's 529 plan, but please check out what the expenses are.
[/quote]

I end up having 2 529 plans from OH. OH 529 has lots of investment options with vanguard low expense.

Thanks

[honeybbq]

@JayKay : Yes those are monthly numbers. Below is more information from bank. Let me know if i am missing anything.

Ok, so it looks like you had things backwards then.  You said your 30 year was about 2400 and your 15 year was 1800, which seemed wrong.  Your new amounts look correct.

Anyway, my take on it is usually to go with the 30 year rather than the 15 year unless the rate difference is quite large (which yours isn't).  Here's the reason:

If you were to get a 30 year and pay it off in 15 years, calculations I've seen show the amount of interest paid is nearly the same as just getting a 15 year.  But the critical difference is that you've got wiggle room.  If you've been paying extra in your 30 year but then your income were to fall or disappear because of disaster, illness, etc, you could reduce your monthly payments with a 30 year, which could make a huge difference in your well-being.  But with a 15 year, you're stuck with that higher payment regardless, which could put you into a much worse position.

That's why I always go 30 year, not 15.  It gives you options.

Agreed. I have a 30 and payoff like a 15. You can run the math/numbers and the difference is less than a year's interest (at least with my calc). It was worth it to me to have that flexibility (and I have a large mortgage).

[nemesis]

@JayKay : Yes those are monthly numbers. Below is more information from bank. Let me know if i am missing anything.

Ok, so it looks like you had things backwards then.  You said your 30 year was about 2400 and your 15 year was 1800, which seemed wrong.  Your new amounts look correct.

Anyway, my take on it is usually to go with the 30 year rather than the 15 year unless the rate difference is quite large (which yours isn't).  Here's the reason:

If you were to get a 30 year and pay it off in 15 years, calculations I've seen show the amount of interest paid is nearly the same as just getting a 15 year.  But the critical difference is that you've got wiggle room.  If you've been paying extra in your 30 year but then your income were to fall or disappear because of disaster, illness, etc, you could reduce your monthly payments with a 30 year, which could make a huge difference in your well-being.  But with a 15 year, you're stuck with that higher payment regardless, which could put you into a much worse position.

That's why I always go 30 year, not 15.  It gives you options.

Very good point.

I have a 15 year mortgage, but wish I had taken the 30 year because I could choose to pay double the amount or more each month.

Right now though I'm forced to pay a certain amount... but the flip side is my mortgage has gone down a huge amount. :)