Quote:
Originally Posted by disneysteve
No. This is one of many places where I don't agree with Dave Ramsey. I would rather get a 30-year mortgage and pay it off in 15 than to get a 15-year mortgage and be locked into the higher payments. A 30-year gives you more leverage and more breathing room if things get tight while still giving you the opportunity to prepay if you choose to.
Also, I'm not a big fan of prepaying the mortgage because over time (the past few months being an exception), my investments earn far more than my mortgage costs me so by keeping the mortgage as long as possible I will come out way ahead financially.
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The idea is to buy a house that you would have the same payment as if you had a 30. You get a little less house, but a much better investment. The payment difference between the 15 and 30 is not that great to make it a bad investment. To say that a 30 gives more breathing room, in most cases, is not true. Most people just buy more house and still live on the edge in a worse investment.