"Possibly unpopular opinion: Forget 15-year mortgages. Do 30," Adcock suggested on Twitter earlier this summer. "Why? Because making extra payments can turn it into a 15-year. And, you can reduce your mortgage payments if times get tough, then resume higher payments later. Give yourself options. Flexibility is nice!"If you borrow $200,000 with a 30-year mortgage at current rates,would be about $846. Over the life of the loan, you'll pay almost $105,000 in interest.
Opt for a 15-year loan instead and your payments will be roughly $500 more, or about $1,348 per month. But you'll pay just about $43,000 total in interest, less than half as much as with the 30-year loan.Adcock's point of view isn't actually unpopular. Financial experts agree that the flexibility of lower monthly mortgage payments is important for many homeowners.
"I've explained it to clients this way," says Mark La Spisa, a certified financial planner and president of Vermillion Financial Advisors in South Barrington, Illinois. "If you had a 15-year mortgage and a 15-year super-duper flexible mortgage, which one do you think you would choose?" Most them then ask what a "super-duper flexible" mortgage entails. "If you need cash, the payments can drop 20% if you want any time you want," he says, "and the rate is only about a quarter of a point higher" than the typical 15-year loan.
The punchline, La Spisa says, is the "15-year super-duper flexible mortgage" is a 30-year mortgage that, like Adcock suggested, you pay back more quickly as your finances allow.and pay off the loan faster — as Adcock put it, turning it into a 15-year. But when money is tight, then you can take advantage of the 30-year's lower payments and use the difference to help with other bills, says Greg McBride, chief financial analyst for Bankrate.
MakeIt Duh.
MakeIt thanks
MakeIt Not with Joe Biden's housing plan. He'll move criminals into your neighborhood, and you'll have to move out.
MakeIt This depends on so many factors. Run analysis to see how much more money you would have by putting that extra money into growth stock mutual funds. A personal decision and comfort level. If you have emergency fund, are maxing out 401k, saving for college, then prepay the house
MakeIt Avoid debt
MakeIt With rates so low, why rush to pay it off, I have a 30 year mortgage and put the extra money into diversified savings and retirement that are earning returns greater than my rate and should long term.
MakeIt It's actually correct. You always have the option to prepay on a 30 year mortgage at the expense of a slightly higher interest rate. You have the obligation to prepay with a 15 year mortgage. The correct move is to get out of debt as soon as possible but the flexibility is key
MakeIt Saleman doing his job
MakeIt Sounds like desperate banks trying to hold up the house of cards they created.
MakeIt
MakeIt Stupid advice, why pay on average an extra 100K in interest if you can avoid it?
MakeIt 😂😂😂🤣🤣 yea just to get in more debt. Mortgages are liabilities, good luck with that shit lol!
MakeIt it is so perverse that it is fun
MakeIt Dumb reason
MakeIt 'because the sponsors paying for this article want to make more money off of you' - there, no need to read now
MakeIt wow
MakeIt I'm a big fan of this, too. You can always pay double to get the equity and early payoff, but it's nice to know you don't have to if life takes an unexpected, expensive turn. Plus, few people live in a home more than 10 years to make the early payoff attractive.
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MakeIt 😂🤣😂 unbelievable. The math said buy house with shortest mortgages. 10 years or lower will be cheaper and low interest rate payment. Do the math.
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MakeIt At very low interest rates only.
MakeIt This is exactly what I do. We need more real world financial talk. This makes every difference in the long term and I think of it just like retirement savings. Pay that extra principal when you can. 👏🏻👏🏻
MakeIt Rubbish. Forget buying a house. It’s all about to crash.
MakeIt Did a 30, paid it off in less than 10
MakeIt build equity faster with a 15 yr mortgage, no one makes extra payments on their mortgage
MakeIt I live in Canada, every 5 yrs we need to requalify for mortgages. If we move the mortgage or we miss a payment or have a NSF in the previous 5 yrs. Does the USA work the same way?
MakeIt Did they make their millions teaching math?
MakeIt 30 years of anxiety, fear and debt slavery. Good idea.
MakeIt because inflation by design. and they cant raise rates. =)
MakeIt Agree completely.
MakeIt 20 year or even 25 year worth a look vs doing the 30. Amazing how small amounts each month going to principal will pay down faster. Before doing this however, would max out 401k and or Roth IRA.
MakeIt Or buy a house that gives you a cheap payment with a 15 or 20 year mortgage. Don't go house broke.
MakeIt Having a 30 year gives you flexibility. You can always pay it down faster if you have the discipline. But if times get tough you are not committed to the higher payment.
MakeIt Long term debt is still debt and still interest paid. (The tax deduction is not 1:1.) Get out of it as soon as possible and use the money for more property or other investment vehicles. Paying interest is throwing money away
MakeIt I converted my 15 yr mortgage into a 9 year. A one-time principal reduction and accelerated payments going forward.
MakeIt Do 30 because the dollar will be worth almost nothing then.
MakeIt actually dont buy its a bad investment
MakeIt 15 year only makes sense for financially stable. Cash flow stable people without dependants.
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MakeIt I do what this article says. I pay a couple hundred extra per month and put my covid check towards the principle. If I need to drop my monthly payment down, I can.
MakeIt 30 mortgages just make more sense. Allows a person to keep debt low, pay off early, and hedge against changes in a person's economy.
MakeIt I have a 95 year mortgage. Payments on my mansion are just $35 per month
MakeIt 30 years of risk. 30 years of fear. 30 years of slavery.
MakeIt Yep pretty much everyone does already
MakeIt I’d opt for a 20yr, Split the difference. Cause when one buys a home extra payments at first might be simple. As life evolves, family, cars, etc. It’ll get harder to make additional. Then you end up paying too much interest. IMO
MakeIt Because if you can’t beat a 3% return on investment you were never going to be a millionaire anyway..
MakeIt Agreed. If you have a 30-year, you can always make extra payments. If you fall on hard times, you can go back to making the min. payments. Consider a 30-year, making minimum payments, and investing your excess capital.
MakeIt Nothing new here as this is how I have always looked at it. Make extra payments on a 30 when you can instead of taking on 15 year payments to start. Then again at these rates back up the truck and load me up as their are so many other places to play the spread and make money.
MakeIt Complete no brainer. Get the 30 year and invest the difference in payment between the 15 and 30 in the SP500. (Average return over last 30 years is 9.8%) In 15 years you'll have plenty of money in your account to payoff the remaining mortgage.
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MakeIt Ever wonder why lenders give a lower rate for a 15 yr mortgage vs a 30 yr?
MakeIt get a mortgage when u r born and pay off just before u die
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MakeIt Why not 💯? That way our grand children can pay for the house - Inter-generational slavery also guaranteed for the 1%!
MakeIt Even better, Forget buying a house
MakeIt Terrible advise. Most don’t have the fortitude to pay an extra payment even if they can afford it. If your budget allows for a 15 year its the only way to go.
MakeIt Totally agree. Problem is most people aren’t disciplined enough to make an extra payment a year.
MakeIt Good thinking
MakeIt 😂 NOW I KNOW THEYRE SAYING ANYTHING 😂