To make it simple, after ten years:

15 year = $148,500 in your pocket

30 year= $46,600 in your pocket.

I just came across your question.
If you can afford the 15 year, I wouldn't run away from it. People don't realize how badly they get hit when they take a 30 year mortgage. Statistically, 30 year loans last for an average of ten years ( people refinance to get a lower rate, cash out, sell, etc.). You are left with so much more equity after ten years on a 15 year mortgage that it would be a shame not to do it if you can afford it.
I will put down the numbers so you can see for yourself:
At 5% with a 30 year $250,000 mortgage, your principal and interest payment would be $1,342 per month. After ten years you will only have paid off $46,645 of the original $250,000 having paid $114,395 in interest.
At 4.25% with a 15 year $250,000 mortgage, your principal and interest payment would be $1880 per month. After ten years you will have paid off $148,504 of the original $250,000 having paid only $77,096 in interest.
You might be paying an extra $540 per month, but so much more of your money is going right back into your own pocket.
It is an amazing savings plan. Most people would spend the difference in payment and not put it in the bank anyway.At this rate, after ten years, if you decide to buy a new home you will have over $100k in your home to use as a down payment.
You will also only have five years left on your mortgage so you could consider keeping the home as an investment property.
Shoud you decide to stay on it the property, you will only have five years until you are mortgage free.
Good luck with your decision. Feel free to contact me if you have any more questions. 908-415-3958.

Hello Buyer,

This questions is all about liquidity. There are a couple of questions you need to ask yourself, some of which Sean mentioned below:

1) How much pressure does a 15-yr payment put on your monthly finances?
2) You mentioned staying in the property for five or ten years, but that's a big gap. If you're leaning toward five then the ARM makes a lot of sense. Even if you need an extra year in the house before selling you'll only have one adjustment, and the LIBOR is traditionally stable.
3) I'm not so sure I like the 15-yr. either for the same reason as Sean.

Ultimately, you need to consider your monthly liquidity first. Far too many borrowers get so wrapped up in rate that they forget the strain they can put on themselves by becoming cash-poor. Personally, I would take the ARM PROVIDED you plan on being there for five or six years (not ten). I'd also skip the 15-yr., there's no reason to kill yourself with payments when you're going to sell eventually anyway. Let us know what you decide! One last thing, make sure you take a look at all three GFEs, some lenders tack on extra points with ARMs to make the rate more attractive.

Kind regards,

Jason Diperstein
E Mortgage Management
800-793-9633 x156
jdiperstein@emmloans.com

What about a straight buy down? Forgot to ask that.

I would ditch the ARM assuming you stay there for the time listed as most likely rates will be much higher at that point.

Personally I would do the 30yr at 5.25 as I would not want to tie up as much of my money to save .75% on the loan.

On the 30yr your at 1,242.46 a month and 15yr at 1,750.12


Lets just say you could get the same rate on a 30yr. You would only save less than 100 a month. But to get your lower rate here you are taking on about 500 more a month in payments.