re: 30,20 or 15 year mortage?

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what if he takes the $ difference in payments and invests it.... just sayin.

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I understand what you are saying. But, most people are not gonna do this. If a person has the discipline to take the extra $ and invest it AND the return is greater than the interest rate on the loan, then you are right. I've had 30 year mortgages and had every intention of paying extra each month, but I did not do it enough. I finally refinanced with a 15 year and I am forced to pay extra. IMO, the 15 year makes people do the right thing.

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pay it off in 15 if you can. you'll save a ton on interest.

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thanks Warren Buffett

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But I don't think Mercedes offers many 0% APR financing deals.

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i wouldn't know. I drive a GMC.

I'm going to the gym. yall have these spreadsheets completed for me when i return.

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You may want to take a 30 year note and make sure you don't have pre-payment penalties. That way you can pay as if it is a 15 year mortgage and get the benefit of paying the loan off early. But you keep the flexibility of adjusting to the required payment based on the 30 year note if something comes up (job loss, a kid, etc.).

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This.

Man, this sure turned into a train wreck.

I'm pretty sure this argument is way more than what he wanted, but I'll add to it any way.

Here are my thoughts.

1- I am usually a fan of financial conservativism and would suggest a 15 year mortgage, but due to this point by Foshizzle,

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Sorry I'm late to this conversation, but especially given that interest rates are at an all-time low you should seriously think about borrowing as much as you can at a 30-year fixed rate.

True, you will be paying interest for 30 years instead of 15. On the other hand, your payments are lower and you can invest a good bit more in a tax-advantage account like a 401(k). Then you can deduct on both sides of the deal.

Paying off a mortgage early, especially when rates are low, is usually a mistake if you can use the money to invest at a higher rate.

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I have to agree that the 30 year note would be the better call.

However, this is not an absolute judgement on the matter.

In order for it to be the most effective move, you should be disciplined in investing the extra 200 dollars (or whatever it was) into your retirement account (IRA/401K). You will likely get better returns over the long run in even simple bond indexes. If you just blow the money on crap, then it's a dumb decision.

foshizzle--Thats what I am doing. Bought a brand new home 2 years ago. 30 year mortgage at 5.3%. I have the plan working to pay it off in 15-18 years. In the meantime I am having 10% of my paycheck taken out and put in my 401k were my employer matches the first 4%.

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I can afford the 15 payments but was wondering if this was the right move.

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Listen to me on this one. You say that you can pay on a 15 year loan. Do this, with a twist...... most get paid twice a month (1st and 15th). Make payments twice a month. This will turn a 15 year loan, into a 12yr. 8 month loan.

Let me know if you need more info. Most banks can do this. I did this one time. But payed the house off early anyway. Once you see the light at the end of the tunnel. Too easy to pay off.

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but is it worth the interest savings over getting more money back come tax time?

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Unless you're in the 100%+ tax bracket, the answer is 'yes.'