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Shelly, Other/Just Looking in Oakland, CA

What about a 15-year v. 30 year loan?

Asked by Shelly, Oakland, CA Thu May 23, 2013

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I agree with Abraham in that you can always make higher payments to pay off a 30 yr loan faster........but....if you have some kind of financial issue down the road (high, unexpected repairs or emergencies), you cannot stretch out the 15 payments to lower them.....why be under pressure to make the higher payments?

If your goal is to pay less interest and "own" your home outright after 15 yrs, that is still possible with a 30 yr loan.

You just won't be under pressure for the higher payments should your financial situation change.
1 vote Thank Flag Link Fri May 24, 2013
Hi Shelly:

In my opinion it is always better to go 30 year unless you are financially very strong or you have a very stable income (like social security or pension). You would usually get a better rate when you get a 15 year loan but with interest rates being so low 0.25% more or less would not make that much a meaningful impact. If by any chance you lose your job,.. you might be under pressure to keep up with your payments when you get a 15 year loan. The good thing about a 30-year loan is you could always pay it off in 15 years but you will not have the option of extending your 15 year loan to a 30 year loan unless you refinance which will cost you a lot of $. It is all about the freedom and options that a 30 year loan will give you (If you decide to go with a 30-year loan make sure you ask your mortgage broker to get you a loan with NO prepayment penalty so there will be no issues if you decide to pay it off faster).

I have a great mortgage broker that I can refer to you if you would like feel free to send me an email.

Hope this helps.

Abraham Bidhendi
Top Producer Realtor® with over 26 years of experience
Awarded as Exit's TOP Buyer side Transactions for the State of Florida
We have had 142 successful transactions during the past year alone.
Exit Realty Access, LLC
Direct: (407) 744-2533
Fax: (407) 444-9925
Email: REOsofflorida@msn.com
Website: http://abidhendi.orlandopropertiesonline.com
Kissimmee Office: 391 N. Main St., Kissimmee, FL 34741
Altamonte Springs Office: 660 Palm Springs Dr., Suite D, Altamonte Springs, FL 32701
1 vote Thank Flag Link Fri May 24, 2013
Using a $100,000 at 5% as an example. Over 30 years you will pay 88,000 in interest. If doing bi-monthly you will pay 71,000 in interest and be paid about 7 years earlier. If going for a 15 year loan you will pay 40,300 in interest....less than half what you will pay in 30 years. Was this answer helpful? If so please click on the "green thumbs up" or the "best answer".

Tony Vega
Antonelli Realty
0 votes Thank Flag Link Thu May 23, 2013
They really should teach stuff like this in high school, I have always wished they would along with checking accounts, credit cards etc. Since they don't you have to learn about them. 15 yr loans build equity quicker, but the monthly payments are higher. If you can easily make the payment then it could be a better way to go than longer term loans.
0 votes Thank Flag Link Thu May 23, 2013
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