Can someone please explain how you save money taking a 30 year instead of 15?
tray831
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Member since
Can someone please explain how you save money taking a 30 year instead of 15?
The rates are cheaper at a 15-year mortgage--than taking a 30-year--so why or how does it become cheaper??
Our appraiser told us this. FH seems to understand it, but I dont.....
Other than more money due per month by taking a 15-year, isnt it still 15 years less of percentage rates at a lower rate as well???
Im so confused....
cluelessbride
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Member since
Re: Can someone please explain how you save money taking a 30 year instead of 15?
I don't understand either, if what you are saying is the case-
you would pay less in the end with a 15 year mortgage than a 30, not more
skew
Posted:
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Re: Can someone please explain how you save money taking a 30 year instead of 15?
the principle (amount borrowed) WILL NOT change regardless of which loan you choose. however, depending on the type of loan, the interest will differ.
#1 - rate for 15 yr fixed is less than 30 yr fixed
#2 # of payments (years) are half, therefore you are paying more towards principle each month, but less in interest (15 years less) over the life of the loan.
get it?
Calla
Posted:
Member since
Re: Can someone please explain how you save money taking a 30 year instead of 15?
The primary explanation I can give is that per month your expenses are less with the 30 year, which gives more flexibility in the budget. You could choose to prepay and still be done in 15 years with a 30 year, but if you get a 15 year and money is tight you cannot choose to pay less per month. I still wouldn't call that 'saving money' but it may make more sense. Another advantage of the 30 year is that maybe you can invest the money in something other than real estate that yields a higher return...
In the end though, yes, if you pay just what is owed, you would pay more over the 30 years than you would over the 15 years.
tray831
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Re: Can someone please explain how you save money taking a 30 year instead of 15?
So all in all, it may be better to take 30 years and try to pay it off in 15--would be the safer bet?
Would the interest rates get credited back to me from the time it was paid off until the time I had till?
Thanks for all the explanations by the way.
DjPiLL
Posted:
Member since
Re: Can someone please explain how you save money taking a 30 year instead of 15?
You don't save money at all on a 30year mortgage.
You save significantly on a 15yr loan. Total interest paid is a LOT LESS than a 30yr loan.
Whoever told you that you save cash on a 30yr loan over a 15yr loan needs to go back to school. LOL
tray831
Posted:
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Re: Can someone please explain how you save money taking a 30 year instead of 15?
Posted by DjPiLL
You don't save money at all on a 30year mortgage.
You save significantly on a 15yr loan. Total interest paid is a LOT LESS than a 30yr loan.
Whoever told you that you save cash on a 30yr loan over a 15yr loan needs to go back to school. LOL
Well thats where my confusion set in b/c it didnt make sense--this guy is like 75--school is over for him --
Calla
Posted:
Member since
Re: Can someone please explain how you save money taking a 30 year instead of 15?
Posted by tray831
So all in all, it may be better to take 30 years and try to pay it off in 15--would be the safer bet?
Would the interest rates get credited back to me from the time it was paid off until the time I had till?
Thanks for all the explanations by the way.
When you prepay, the amount you put in over the standard payment is 100% principle, no interest. So, no interest gets credited back, but you simply have fewer payments to make in the long term.
This is what my husband and I opted because we were expecting to have children, and weren't sure whether or not I'd continue to work -- which would mean that what we could afford might become less. This way we wouldn't be forced to refinance, we could just adjust our payments according to our means. This doesn't save every possible penny, but does allow us a greater degree of control.
soon2bMrs
Posted:
Member since
Re: Can someone please explain how you save money taking a 30 year instead of 15?
The total interest paid on a 15yr loan is significantly less than that of a 30yr loan because the amount of time you are borrowing the money for is less. If you use the mortgage calculators on mlsli you can see the difference in the total interest paid.
