15 year vs. 30 year mortgages

15-year:

Pro: You can save a boatload of money in interest by paying the mortgage off in half the time.
Pro: Slightly lower interest rate.

Con: You're locked into a much higher monthly payment.

You can very easily turn a 30-year into a 15-year by simply doubling your payment. This also offers you the flexibility of *not* paying the double payment if an unexpected financial expense arises.

100bps or 200bps is irrelevant in this mkt... the KEY is the "in" price..... do a "sensitivity" analysis... running several scenarios...

1) wife leaves you;
2) you get triplets.
3) fall in love w/ a bikini model move to Hawaii

etc

Thanks NYCMatt, I actually understand what you wrote. Big help. Have a nice evening.

Gee Lobster, next you'll be asking about kitchen finishes in the apartment you don't yet have, in the neighborhood yet to be determined ; )

This one is to the point. In the example the payment for a 15 yr mortgage is about 25% more than the 30yr, owing to reduced interest rates and significant interest savings.

http://financialplan.about.com/cs/mortgagesloans/a/15YrMortgages.htm

Good luck, c'mon in, put on your bikini, the water's good.

Spinnaker, you're always very funny. I enjoy your comments and thanks for the advice.

Let the sharks have their fill of the lemming penguins then jump in. Seriously, a $1000 swing in mortgage payment due to interest or 15 vs 30 should b the least of your worries getting into NYC re at the moment IMHO. Not so humble, really. It would take 5yrs to make up a $100k swing in asset price. Just think about it w/o drinking the lemming juice.

Obtw, spinny is the new ad model for lemming juice

Personally, I've always gone the 30 yr route to give myself the lowest payment knowing I had the option to make higher payments.....but of course never did.

I think a 15 year makes a lot of sense for someone in their 40s....it's a source of forced savings that also just so happens to leave you paid off just about at retirement age.

Difference in monthly payment is as follows for a $100,000 loan amount (I pulled some rates out of the air for illustration purposes):

6% 30 year = $600 per month
5% 15 year = %790 per month

Doesn't seem like a big difference per month, but after 15 years you'd be paid off with one and still owing $71,000 with the other if my HP12C is working properly tonight......

I say again.... the sailboat is demasted, you've got a 2 inch hole in the bow letting in 50 gps, your wife lays unconscious due to an accidental jibe, the diesel won't start... and you're asking should you buy the more expensive bumpers....

I've always gone with a 15-year mortgage. I have always liked the lower interest rate versus the 30-year mortgage.

Ultimately, each person has to decide what makes sense for them.

And in an inverted yield curve nevironment? As we are are headed to shortly. Hmmmmmmmmm. Lots of variables except the fact NYC re will be cheaper in 1 yr.

My boat is fine 67. Wife is lounging (in her bikini) in the hammock I set up between the mast (still very erect) and the jib halyard. The only hole I see is in your math that calculated 50 gps from a 2" hole.

Hey little buddy, if your better half ever gets tired of all your wet dreams of oysters and 500psf you're both welcome aboard for cocktail hour. Promise I won't mention the Ericson or the rental.

I stand corrected. 2 ft.

Hoist the halyard, lube the traveler, and set the spinniker. I always like to sail with that Styx song. :)

Happy sailing spinny, at least you haven't knocked up your gal 'yet'. And maybe for a guy like you with a starter ph and a larger home need in a few yrs will be fine. Ie price compression on 3 bdrms will happen harder and quicker than your oyster in the sky. ; )

"Difference in monthly payment is as follows for a $100,000 loan amount (I pulled some rates out of the air for illustration purposes):

6% 30 year = $600 per month
5% 15 year = %790 per month

Doesn't seem like a big difference per month"

No, not for your artificially low mortgage assumption. But who in NYC is getting a mortgage for only $100,000?

Now, for a $300,000 mortgage (and even THAT is on the low end), the difference is $570/month. That's pretty damn substantial.