I'm looking to buy my first home and I'm thinking the best mortgage strategy is to go for a 15 year loan to

Asked by Brian Ray, 68059 Mon May 11, 2009

keep the cost of the loan low and maximize the payments to the house instead of the interest. Then, 5 years down the line I can sell or refinance which will allow me to rent with lower monthly payments. What do you think of this strategy?

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Brian L. A.…, Agent, Colorado Springs, CO
Mon May 11, 2009
Hi Brian :o)

Buying your first home can sometimes seem a daunting task, but I applaud you for looking to make a smart investment during a great time to buy and doing some research into your options before making the move.

If you have the financial ability, I have seen some people use the strategy you suggest over the years and they are generally pleased with the results, however, Chris makes an excellent suggestion below in stating that your best bet would be to consult a mortgage professional to go over the options available to you so you can make an informed decision which is best for you.

Thanks to a heavy military population, we have continues to have an active market with the average move rate of 3 to 5 years instead of the national average of 5 to 7. Many of my military clients use their homes here as rentals while they are finishing out their careers because they intend to move back here after retiring. Recently I have also seen some clients with the financial ability to hold 2 homes use their Colorado Springs property as a rental while living in different areas of the country. The Colorado Springs rental market is competitive and rental rates remain competitive as well, so the keys to success with this strategy would be to make sure your loan will work for you while you are living in the property, to make sure you purchase in an area that is desirable to future renters, and make sure you have the right financing to allow you to cash flow the property at a reasonable amount.

If you are looking to buy in Colorado Springs as your post indicates, you should be aware that for the most part our market is not suffering the severe depreciations that many areas of the country are. In fact some areas in the northeastern part of our city have even seen a slight appreciation of around 1% over the past year.

Right now the best rates we are seeing in Colorado Springs are being offered by Credit Unions, however there are a few solid banks that are also offering competitive rates. I believe it's important to look to using a lender who is local to the market in which you are looking to purchase because they are aware of local issues, charges and practices that can help make your loan and purchase process go smoother with less surprises.

If you would like I could refer you to several local Colorado Springs lenders who could best advise you and I have mortgage calculators available on my website at http://www.brianwess.com/MortgageCalculators that will allow you to explore different scenarios.

Best Regards
Brian L. A. Wess
Realtor®, Broker Associate
Residential & Investment Specialist
Pat Newell & Associates, Inc - Metro Brokers
Colorado Springs, CO
Direct: 719-528-6672
Web: BrianWess.com

Voted "Best Realtor in Colorado Springs 2006 & 2008"
The Independent News Readers Poll: Gold 2006, Silver 2008
0 votes
Sue Bigus, Agent, Colorado Springs, CO
Mon May 11, 2009
hi Brian,
I like how you look to the future with your financial planning, you will stay on a good track that way! I ditto the agent who mentioned Dave Ramsey, he gives the best financial advice out there. As to your specific situation, if you want the option of lower payments down the line I would suggest not getting a 15 year mortgage now. Instead, get a 30 yr and pay it as a 15 yr. The net result will be almost the same, except that you get a bit lower of an interest rate on the 15 yr vs. the 30 yr. Then if you want to rent your home out down the line, you can revert to the 30 yr payment schedule. Rates are so low now that if you refi in several years, you could end up paying more because rates are higher. Let me help you get the best home for the best price~ call or email me.
Sue Bigus
Herman Group Real Estate 229-5889
Web Reference:  http://www.SueBigus.com
1 vote
Pamela Weath…, Agent, Colorado Springs, CO
Mon May 11, 2009
Great question. I'm all about getting a mortgage paid off as soon as possible. Are you familar with Dave Ramsey? If not visit his web site at http://www.DaveRamsey.com. He is all about staying out of debt and only doing a 15 year mortgage. If you need a good local lender to sit down and go over the numbers with you email me. I have a great lender that would be happy to show you which mortgage will work best for your needs (with no obligation). If you have not found a home yet visit my website to see what homes are available in and around Colorado Springs. If you see one you like and need more information or would like to take a look I'll get that set up for you. Have a great week.
Pamela Weatherford
Keller Williams Hope Realty
Soli Deo Gloria
1 vote
Gilda Baxter…, , Colorado Springs, CO
Wed May 20, 2009
Hello Brian
If you can afford to pay off your home in 15 years that would great. Some people go ahead and do the 30 year mortgage and pay double or whatever needs to be paid to pay it off in 15 years. The benefit to this is: if something happens and you can't make the higher payment, then you have the option to pay the lower payment.
Lots of people use the 1st home to get the second home by refinancing or selling. If you want to rent your home out, you'll also have cheaper payments if you decide to do that. (I'm a landlady and do understand that mind set) I'd find a lender that you can work with that you trust. Ask people you know if they had a good lender (I also have a few in mind). Tell the lender what your plan is and see what they think. It's like a partnership in your future. You'll want to find a realtor that understands investments in housing also. You'll want to find a lender that understands investment in real estate also.
Web Reference:  http://www.GildaBaxter.com
0 votes
Dodi Bateman, Agent, Colorado Springs, CO
Tue May 12, 2009
Hi Brian, small world LOL
It is really great that you guys are looking around and trying to find the best deal for you.
I would agree with both Mike and Brian.
If you still feel comfortable to contact Rich please do so.
Contact me with any questions you have.
0 votes
Mike Washing…, Agent, Colorado Springs, CO
Mon May 11, 2009
Hi Brian,

Please speak with my lender to advise you on the 15 year mortgage strategy. Her name is Beverly Creswell with Evergreen Home Loans at 719-440-1082. Ask her about the $8000 federal tax credit and the Colorado Housing and Finance Authority (CHFA) program. After she qualifies you my team and I will assist you in finding the right home at the right price and this is truly the right time. I can be reached at 719-265-9203.
Web Reference:  http://mikewashington.com
0 votes
Chris Mabry…, , Tucson, AZ
Mon May 11, 2009
If you are working with a loan officer, they should be the one you turn to for advice on this. A 15 year mortgage will mean less towards interest and a faster route to payoff. But that also comes with a much larger monthly payment. For a first time home buyer, I don't see many people go the 15 year route. Since your payment will be higher, you will not be able to spend as much on the home, and therfore not get as nice of a house. In my opinion, you are better off with the 30 year and a nicer house. Since you are most likely buying in a depreciated market, your home will come up in value over the next 5-10 years. Talk it over with your mortgage pro and they will show you some long term data. Good luck!
0 votes
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