15-Year Mortgages Grow in Popularity
In this weekend’s Real Estate section, the Times had an article on the increasing popularity of 15-year, fixed-rate mortgages: “Brokers and mortgage industry executives say that these loans are becoming especially popular among people who want to shed debt more quickly, and in light of the current economic atmosphere, that goal is perhaps more widely…
In this weekend’s Real Estate section, the Times had an article on the increasing popularity of 15-year, fixed-rate mortgages: “Brokers and mortgage industry executives say that these loans are becoming especially popular among people who want to shed debt more quickly, and in light of the current economic atmosphere, that goal is perhaps more widely applicable than ever. Of course, debt shedding comes at a price. Those borrowing $400,000 on a 15-year loan, with a 4.375 percent interest rate, the average rate earlier this month, can expect to pay about $3,034 a month, compared with about $2,056 a month for a 30-year fixed-rate loan with a 4.625 percent average rate. (The payment excludes costs like property taxes and insurance.) Because a 15-year loan also has 180 fewer interest payments than a 30-year loan, the borrower with that 15-year loan would pay $194,000 less in interest over the life of the mortgage.” Any readers considering them over 30-year loans?
Photo by Rev Dan Catt
Ditto what Flatbushrising said.
I just closed at the beginning of the month and my bank of choice didn’t offer 15 year, so I went with 30 year.
But with 4.5% interest and no pre-payment penalty I’m sure I’ll have it paid off before 15 years are up. I also have the comfort of knowing if something were to happen I’ve got the lower payment.
I think I’d get a 30 year and pay it off in 15 (or 20, or 10, depending).
“THAT is how society should work.”
Fortunately, no one has actually asked Rob to re-engineer society to work to his exclusive benefit.
I would think that a 15-year mortgage means that the bank is taking significantly less risk, and I would have assumed the spread would have been much bigger than just 22 bps. I would have hoped for 100 bps.
Gonna have to second randolph on this one.
Boerum Hill, look at the NY Times chart again – 30 year is 5.41%, 15 year is 5.19% (ie 22bps difference). Doesn’t sound like a lot but it adds up over the years.
I agree that it’s good to have some flexibility though as no-one really knows where they will be in 10 years time.
would love NO mortgages – houses will be 90% off peak if only all-cash purchases
I agree with Denton and Boerum Hill. Pay more towards your principal whenever you can. You just need a little more discipline.