How long should your mortgage be?


I love the 15-year mortgage and no
matter how much I talk about it I can’t really get people excited about it. A lot
of times people who are perfect candidates when they’re buying a home
for a 15 year mortgage still take out a 30 because people that are really
careful with their money are always doing what ifs. Well what if this happens
at my job or whatever and suddenly I have this much larger monthly payment I
have to make on a 15-year loan than a 30, what would I do? What would I do?
Well the thing is I find that a lot of people that are perfect candidates for a
15-year loan already are doing so many other things,
they’re great savers, they’re building money for their retirement, they have
money put aside for emergencies and all the rest and you compound the benefit to
yourself if you’ll do a 15-year mortgage instead of a 30. I mean first of all
you’re out of debt in half the time. Second, you pay so much less interest
over the years, and third, the interest rates on a 15-year loan versus a 30,
depending on current market conditions, tend to be a half an interest point
lower to as much as a full interest point lower than a 30. So it helps
you build up equity in your home so much quicker you’re keeping money in your
pocket instead of paying it to the bank. And I know, I know that you’re thinking
well what if, what if, what if. Let’s think of the positives as well. If you’ve done
those other checkmarks you are somebody who lives on a lot less than what you
make, then take this one additional leap and look at the 15-year loan instead of
the 30. The discipline is great, the benefits to your life long-term are
extraordinary and especially if you are 45 or older I absolutely want you when
you’re buying a home looking at a 15-year loan instead of a 30. Because
once you hit retirement, it’s so much better if you can be mortgage debt-free
that you don’t have to worry about a house payment each and every month and
it allows you to live on less in retirement. So I know that it
might mean you have to buy a little bit smaller home to be able to do that if
you’re in your mid-40s or later but the benefit to your wallet and your
financial security — extraordinary!

Paul Whisler

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