Should You Have a 15 Year Or 30 Year Mortgage?
There are multiple schools of thought on this question and most of the time the answer will depend on the person buying the house. How much discipline does the buyer have with money? Do they need help making payments or are they able to make extra payments easily? There are lots of variables that are specific to each situation but here are some things to consider.
Would you rather have a bigger monthly payment for a shorter amount of time? With a 15 year mortgage you have to make big payments each month, no exceptions. If you buy a cheap enough house this could be easy for you. The biggest advantage is saving a ton of money on interest, the biggest disadvantage is the much larger payment that reduces your cash flow.
If you choose the 30 year mortgage and pay only the minimum each month you are looking at twice the purchase price of your home just in interest payments. Do you really want the bank to make that much money off of you? If you are able you should may additional payments in order to whack away at the total interest you’ll pay over the life of the loan.
I would say never get an interest only loan. This is just begging for trouble and is how a lot of people started a snowball called the great recession. Between that an a variable interest rate loan the country is in shambles and people are very far underwater on their mortgages. Always gets a fixed rate loan for a fixed amount of time.
In our case we have tremendous financial discipline so we chose the 30 year mortgage and made large additional payments. We refinanced the note in order to get a very low interest rate and kept getting a 30 year note each time. As a result our mortgage payment is very low so if we need to pay only the minimum we can. When we are flush with money we can also choose to make bigger payments to pay it off faster. Having the flexibility is very important to us, but it only works because we have such discipline.
The author enjoys writing about a variety of topics including the site http://www.zojirushi-rice-cooker.net which also has the following page detailing zojirushi rice cooker recipes.
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