Comments on: 15 vs 30 Year Mortgages – Longer is better!

By: The Tragedy of the Miss Universe Entertainment | acneadvocate.com

The Tragedy of the Miss Universe Entertainment | acneadvocate.com — Sat, 19 Dec 2009 08:30:25 +0000

[...] 15 vs 30 Year Mortgages – Longer is better! I read an interesting post that really got me thinking today. It was written by a great blogger nicknamed Money Hawk, if you have never read his blog I implore you to check it out HERE. He wrote a great post titled “Kick Financial Ass With a 15 Year Fixed…… Related Websites [...]

By: Steve

Steve — Thu, 12 Feb 2009 22:37:59 +0000

I would have to agree on some of your points. I am actually in the process of refinancing. I am in a very good position financially because I have always lived within my means.

I like the flexibility of the 30 year with additional payments. The 15 year is attractive, but I want the buffer of those extra bucks if I need them.

I am going to go the 30 year and pay the crap out of the principle. I figure with my financial habits and a possible dual income coming with a marriage we can be clear in 8-10 years.

Then it will be time to look at other properties and or businesses.

By: My Journey

My Journey — Thu, 11 Dec 2008 20:56:45 +0000

Wow,

Money-Hawk you have my wife on your side I may have to back off the topic!

By: The Wife

The Wife — Thu, 11 Dec 2008 18:05:33 +0000

I am going to have to agree with The Money Hawk on this one. Although I normally agree with my husband when it comes to these matters, on this one I think he is wishful thinking. In a perfect world his plan would work, but I don’t think that the average person is programmed to be able to make the right choice when it comes to money. Most people never live within their means, which got us to where we are today, and therefore I don’t think they will do what’s right and save the difference or pay early.

By: My Journey

My Journey — Wed, 10 Dec 2008 14:34:23 +0000

“The best argument you have is that the 30 year mortgage gives you the possibility of paying like a 15 year, but without the handcuffs should something bad happen.”

This was my whole point of writing the post. You are right, most people won’t do it. Most people won’t pay off their mortgage earlier either, nor will most people CHOOSE to take out a 15 year vs a 30 year mortgage product (as you say it is the least talked about product). Sometimes I find it fun to do these academic excercises anyway.

By: Kevin @ The Money Hawk

Kevin @ The Money Hawk — Wed, 10 Dec 2008 06:11:59 +0000

Oooo…me, me, me!

Lol.

My argument is that most your “observations” are assumptions…

Yes, we can base off the market average and even go lower than that for safety, but that doesn’t mean its actually going to happen. There is a chance our “investments” could go down in value, stay the same, or only increase slightly. Paying off the mortgage is a sure thing.

Less than 50% of new small businesses make it to the four year mark and 90% fail within 10 years. If you use the extra to start a small business and bank on that being better than using the money to pay off your mortgage and release your mortgage payment from your budget, the odds are against you. In fact, by opening a business, you could be opening yourself to a money pit if the business doesn’t do well, costing you even more.

The best argument you have is that the 30 year mortgage gives you the possibility of paying like a 15 year, but without the handcuffs should something bad happen. This is a great argument, but how many people do you know will actually look at a $2,000 mortgage and make a $2800 payment and do so consistently? Personal finance is about behavior; sometimes forcing yourself to do the right thing isn’t such a bad idea.