15 yr loan or 30 yr loan?

C

Cubic Zirconia_IHB

New member
With the interest rates going down, I have a question for you guys.



Had we bought at 6.5% interest rate for a 417k loan, the monthly payment would have been 2600.

At 4.5% (wishful thinking rate for 30 yr fixed), the monthly would be 2100.

If 30 yr is 4.5, 15 yr loan would be 4.1 (?), the monthly would be 3000, which we can afford to pay.



What are the pros and cons of going a 15 yr in this market? Please share your views.



CZ
 
Get the lowest 30yr fixed possible, then just pay it off as fast as you like. No need to mess with a 15yr when rates are this low. Plus you have the "Option" of a lower payment, if times to get tough.
 
[quote author="Cubic Zirconia" date=1229660456]With the interest rates going down, I have a question for you guys.



Had we bought at 6.5% interest rate for a 417k loan, the monthly payment would have been 2600.

At 4.5% (wishful thinking rate for 30 yr fixed), the monthly would be 2100.

If 30 yr is 4.5, 15 yr loan would be 4.1 (?), the monthly would be 3000, which we can afford to pay.



What are the pros and cons of going a 15 yr in this market? Please share your views.



CZ</blockquote>


Depends of your age, but if you are 40 or older, I think it makes more sense to use 15 years.
 
[quote author="Cubic Zirconia" date=1229660456]With the interest rates going down, I have a question for you guys.



Had we bought at 6.5% interest rate for a 417k loan, the monthly payment would have been 2600.

At 4.5% (wishful thinking rate for 30 yr fixed), the monthly would be 2100.

If 30 yr is 4.5, 15 yr loan would be 4.1 (?), the monthly would be 3000, which we can afford to pay.



What are the pros and cons of going a 15 yr in this market? Please share your views.



CZ</blockquote>


15 year loans put you at risk. You can always pay 2 extra payments to principal per year on a 30 year and pay it off in 15 to 16 years. If you lose you job, break a leg or have some other family emergency that extra 4 to 500 hundred dollars may be the difference of you being able to eat or not. Give yourself the break and go with the 30 year and you will have a choice.
 
The last few times I checked with my Credit Union, the 20 yr. had the lowest rate, 30 yr. was second and the 15 yr. was higher than both. I've never seen that before but for the past two weeks, it has been true. Someone else here also found the same when checking with other institutions. Personally, I just don't like the idea at 42 years old of starting all over with a 30 yr. I understand everyone's logic in choosing the 30, but I think next time, I'll pick a 20 or a 15.
 
If you can comfortably afford a 15 year loan on your home, I'd say go for it.



If you get a 30 year loan, you can still make an extra payment every year with your tax refund.



If it's an income property and you're only looking at cash flow, then that's another story. If you can make enough positive cash flow from your income properties, then it doesn't really matter that your primary residence has 30-year loan at age 40 or 50. Though it's always a good idea to pay off your home.



<img src="http://img.scoop.co.nz/stories/images/9910/162b732806bb566e4e0e.jpeg" alt="" />
 
[quote author="Cubic Zirconia" date=1229660456]With the interest rates going down, I have a question for you guys.



Had we bought at 6.5% interest rate for a 417k loan, the monthly payment would have been 2600.

At 4.5% (wishful thinking rate for 30 yr fixed), the monthly would be 2100.

If 30 yr is 4.5, 15 yr loan would be 4.1 (?), the monthly would be 3000, which we can afford to pay.



What are the pros and cons of going a 15 yr in this market? Please share your views.



CZ</blockquote>


4.5% is not wishful thinking. I just locked in a 4.625 with no points an hour ago. I've heard of people getting 4.5% with negative points with indymac.



http://www.fatwallet.com/forums/finance/788032/?start=1320



check this thread for more information. Great resource.



I say go with the 30, rates aren't that different and gives you more flexibility.
 
15s are a good option if you really want to stack up the equity and work towards a better profile for retirement (and/or more equity to 'move up') such that the higher payments help keep you disciplined and on that path. Of course, sacrificing for what may be imaginary home equity isn't the most fashionable thing these days, but that might change at some point.
 
You must log in or register to reply here.
Back
Top