Mortgage: Fixed 30 years interest rates

[thefuzz]

Oh I know... I will pay around 200k in interest over 30 years... So the question is... Should I lock my rate? Whatcha guys think? My close date is Oct 26th.

Yes, lock the rate if you can get below 3.5.

Ask for a 1 time free float down, or at least tell them that another company is offering you one for free.

You can lock at todays price, and if it drops between now and your close date you can change it then for free.

Not all banks will do this but many will.

[Ja Rhule]

Will do. Thanks.

[Cyberjag]

I cannot do 15 years. I got a wedding coming up and I'm first time home buyer.

Is it that you can't or won't? What is the real difference in payments?

If you're locked in to a 30 year, you're almost better off renting.

[Ja Rhule]

Can't. I got a really good deal on a house, I can actually resell it for $50k more in 1-2 years.

[Jase]

Is it that you can't or won't? What is the real difference in payments?

If you're locked in to a 30 year, you're almost better off renting.

The difference between a 30-year and 15-year mortgage rate isn't much these days. (0.5%-ish?)

That translates to 30-40 dollars extra on each payment per $100,000 of mortgage to pay a 30-year mortgage off in 15 years versus paying off a 15 year mortgage off on-schedule.

the insurance against losing your job is worth it to me to go with a 30-year over a 15-year.

[Ja Rhule]

What's the insurance against loosing ur job u talking about?

[Ja Rhule]

What's the insurance against loosing ur job u talking about?

[thefuzz]

What's the insurance against loosing ur job u talking about?

He is just saying that if push came to shove he could go back to original lower payment of the 30 year if he were to have a bad month, or lose his job.

Otherwise he would pay extra toward the principle every month and make it act like a 15 year.

Funny thing is though, less than 5% of the country consistently pays more that the mortgage payment.

[thefuzz]

Is it that you can't or won't? What is the real difference in payments?

If you're locked in to a 30 year, you're almost better off renting.

Disagree, the tax benefits and very low mortgage rates offset that by at least a few hundred dollars per month.

I am not talking house vs. apt, but house vs. equal house on rental market.

[Jase]

He is just saying that if push came to shove he could go back to original lower payment of the 30 year if he were to have a bad month, or lose his job.

Otherwise he would pay extra toward the principle every month and make it act like a 15 year.

Funny thing is though, less than 5% of the country consistently pays more that the mortgage payment.

I used to be one of the 5%.

Then I had another kid. :(

[thefuzz]

I used to be one of the 5%.

Then I had another kid. :(

I can't imagine.

What's funny about that is people don't realize how much an extra $50-$100 per month every month toward principle will do for you.

Literally save you tens of thousands of dollars.

[MadHatter]

If you can swing a 15 year, rates are better still and costs are significantly reduced over the life of the loan.

Unless you are about 45 years old or older, entering into a 15 year mortgage is not smart. Given the extremely low interest rates on mortgages and the tax dedictiblity factor, you are better off paying a lower payment and investing the incremental amount.

Not to mention that the mortgage tax credit is the primary reason that most Americans are able to itemize their deductions. By having to take the standard dededuction (instead of your itemized deduction with mortgage decuction), you are likely to pay a higher effective tax rate.

Again....30 year mortgage and invest the additional amount that you would have paid on the 15 year mortgage. You will come out better off 99% of the time.

[MadHatter]

I can't imagine.

What's funny about that is people don't realize how much an extra $50-$100 per month every month toward principle will do for you.

Literally save you tens of thousands of dollars.

But when the effective rate is only about 2% (actual rate minus the impact of it being tax deductible), you are better off investing the additional $100. You are almost guaranteed to earn significantly more than a 2% return over a several year period.

[Cyberjag]

Unless you are about 45 years old or older, entering into a 15 year mortgage is not smart. Given the extremely low interest rates on mortgages and the tax dedictiblity factor, you are better off paying a lower payment and investing the incremental amount.

Not to mention that the mortgage tax credit is the primary reason that most Americans are able to itemize their deductions. By having to take the standard dededuction (instead of your itemized deduction with mortgage decuction), you are likely to pay a higher effective tax rate.

Again....30 year mortgage and invest the additional amount that you would have paid on the 15 year mortgage. You will come out better off 99% of the time.

I think Dave Ramsey would thoroughly disagree. :)

And you're assuming that the balance would actually be invested. How often does that actually work out?