Quote:
Originally Posted by disneysteve
maat, I think the point is that if your goal is a paid off home, you can accomplish the same thing as Dave Ramsey suggests in a safer way by taking the 30-year loan and saving/investing on your own until you have enough to pay off the balance of the mortgage. By doing it that way, you retain access to those funds if some other need were to arrive (like unemployment or illness) and, most likely, get a higher return on your money in the process which actually gets you the paid off home faster than the other way. The 15-year loan ties your hands and limits your options moreso than the 30-year loan. Neither way is "right" or "wrong" but one way is better.
Another question for you: I have more than enough in savings to pay off our mortgage right now. Would Dave Ramsey's system have me pull the money out of savings to pay off the loan?
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If you had money that was not tied to IRA's or 401k and you were sufficienly on track for retirement. Yes he would, he would say that you would have to take the house payment and add it to your investments.
I'm not arguing that taking the difference from a 30 year and investing it is a bad plan, but you do have to weigh in all the variables: Taxes on the investment, dilligence to stay on the plan. In reallity, very few people are as dlligent as you are. The 15 forces people to at least build good equity.
You need to remember, I base answers on what will normally happen when someone gets a 30 year. But I do agree that your plan if done religously is better, but not a great deal better. In the event you have a major illness and need the money, you can refinance or take out an HEL if necessary, though a last resort.