I have been offered a 30 yr mortgage on a 55k dollar property with 3% down and almost 2500 of closing costs the monthly note is 328.49 at an intrest rate of 6.25%.
I have also been offered a 15 year mortgage loan for 464.74 at 6.5% with 3% due down and a closing cost of around 2500.
I dont think I can safely afford to pay the 15 year mortgage monthly as there is also 200.00 a month in condo fees. Should I just go with the 30 year mortgage and try and pay the 15 year note?
Thanks!
2007-02-22 10:53:30 · 8 answers · asked by hopes2graduate 1 in Business & Finance ➔ Renting & Real Estate
It seems strange that the rate on the 30 year is higher than the 15. It should be the other way around where the 15 is 6.25% and the 30 is 6.5%; if it is not a typo then you should find another broker because the banks charge a higher interest rate for longer loans and lower rates for shorter terms . If it is a typo then your total payments in 30 years at 6.5% is 125,149.47 (347.63 monthly payment x 360). On a 15 year your total payments would be 84,884.86(471.58 monthly payment x 180). That's a savings of $40,264.61 over the life of the loan. If you can afford it then you should stick with the 15 year.
2007-02-22 16:01:30 · answer #1 · answered by tianaramal 4 · 0⤊ 1⤋
I just got out of the mortgage feild, after being a mortgage broker for the last 8 years. You have a really low intrest rate @ 5 %, But how long have you been in the mortgage. If you are 3 or 4 years into the mortgage then a good deal of your payment is going directly towards the principle intrest every month. If you go to a 30 year fixed @ 5.75, it sounds like you are only paying .75% more, but the fact is that you will not start to pay off the principle for about the next 10-15 years. Go online and look for an Amortization Calculation, and plug inwhat you curently have and then plug in the mortgage that you are looking at, and then look at the reall cost of moving into a 30 year loan. I would leave the mortgage that you have alone if you can afford the payment!
2016-03-29 07:46:46 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you think you might have problems with the 15 year term since the payment would be a little higher then go with the 30 year or maybe cut it to 25 years if possible. Then Either save the extra money if you are able to or pay a little extra each month if you can towards the principal of your loan. I wish you the best and remember after paying for a few years there is always the chance to refiance and get a better percentage rate with an even lower payment but to where you will save money in the end. GOOD LUCK
2007-02-22 18:43:08 · answer #3 · answered by Anonymous · 0⤊ 0⤋
One thing to keep in mind is that with a fixed rate, your payment is stable for the term of the loan. But your income will all in likelihood go up considerably.
Let's say the 15-year is a stretch for you now. But you get a 3% raise next year, and a 3% raise the year after that. Suddenly, it's not a stretch, and you have no problem paying it. Then, 15 years from now, you're done. No more mortgage.
Also, you don't mention property taxes - have you factored that in? I've got to imagine that they add at least $200/month.
I'm not saying you should go with the 15-year, I'm just saying you should factor in your future income being higher before making the decision.
2007-02-23 07:20:53 · answer #4 · answered by Quixotic 3 · 0⤊ 0⤋
I agree with luvthedrew's answer. The good news is the payments they quoted are accurate given the term, rate & principal amounts. (ie. you have an honest lender) Go with the 30 year or better yet, see if you can find a 20 year with a similar rate if you feel comfortable with a payment range of $389.95-$397.76.
The key to saving a LOT of money in interest is to make extra payments on the principal. The earlier in the loan you make those extra payments, the more money in interest you SAVE over the term of the loan! The great thing about making extra payments is YOU decide how much extra to pay that month. I typically try to pay $100 extra on my home loan each month. More if i'm having a good month. Less if things are slow.
Tip: make sure they apply the extra money you pay to the PRINCIPAL ONLY and not treat it as an advance payment on Principal & Interest.
2007-02-22 11:16:49 · answer #5 · answered by Chad 1 · 0⤊ 0⤋
I think you answered your own question. Sounds like the 15 year mortgage is a bit of a stretch for you. So take the 30 year. Just because the payment is lower doesn't mean you HAVE to make that payment. You could pay the larger amount if you can and still pay off the loan in 15 years. Just make sure there is no pre-payment penalty.
2007-02-22 10:58:48 · answer #6 · answered by The Drew 4 · 3⤊ 0⤋
We offer 40 and 50 year mortgages if you're interested. Lower payments per month.
2007-02-22 13:28:52 · answer #7 · answered by Phil H 2 · 0⤊ 2⤋
Split the difference, go for 20!
2007-02-22 14:50:27 · answer #8 · answered by CEESONE 4 · 0⤊ 0⤋