Quote:
Originally Posted by project15
Started listening to Dave Ramsey's cd again - specifically on mortgages. He recommends NEVER buying a 30 year fixed mortgage and stick only to the 15 year fixed with at least a 10% down payment and to stick to 25% of your NET income for a monthly payment.
I was thinking about this since the idea of paying a mortgage off in 15 years is enticing and I COULD afford it, but it's not ideal as we would have to move our price range down by about $25k which knocks us out of the neighborhood that we really love at the moment. However, that extra $25k added to the mortgage, plus another 15 years would probably come out to an extra $100k in payments over the life of the loan. His argument towards extra payments with a 30 year is that not many people stick to them.
I know that most of you have 30 year fixed, but would you have gone 15 year if you had the chance even if though it bumps your price range down?
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project15,
It all depends on your overall goals. If my goal was pay off the mortgage AND live in the neighborhood of my dreams, I would sign up for the 30 year note and make additional payments.
Our first loan was a 30 year loan (this was back in the 1980's when the interest rates were terrible--we paid close to 10% interest). It was a no-brainer to go to a 15 yr note when the interest rates came down and we refinanced. The payments were lower AND we shortened the length of our loan. Our house is paid off now.
We did make additional payments every month because it was a goal to have the house paid off before we retire. It was really easy to stick with this when we set up the automatic electronic payment with the mortgage company. I would plan for how much extra we would send in for the upcoming year and set it up on the automatic electronic payment. If I had been sending in payments by mail, I think there would have been more of a temptation to not send in extra if I had a lot of expenses in a particular month.