I don't have 20% to put down, I can afford a 15y mortgage

[cschin4]

Yes, there are lots of reasons NOT to get a 15 yr mortgage. I would encourage you to get a 30 yr. Why? Flexibility. Think about possible life scenarios. First, if you want to pay off a 30 yr in 15, you can do so with no prepayment penalty. So, you already have that option there. But, in real world issues, think about it. IF you are laid off, ill, disabled, have a period of decreased or reduced income, you will have an easier time swinging it for awhile and getting by if you are not locked in to the higher 15 yr payment. The 30 yr offers you some breathing room and the time you need breathing room is when things are tight. So, it is kind of like a bit of insurance on your house and your ability to keep current. Right now, you might not ever forsee any problems paying the mortgage, but I can tell you that time and nature and fate and circumstances have a way of popping up when you least expect it. So, i advise the 30 yr.
Having said that, we paid off our 30 yr mortgage in 7 yrs.

[canada94]

Well done Steve, you wont lose money with that deal, dont you jus love it when a plan comes together

[jicasey]

Originally Posted by steve85

I know everyone says to put down 20% when buying a house.
Putting 20% into the down payment wouldn't leave me with enough liquid savings to feel comfortable.
I'm on track to retire at 55, currently 25yo.
Income: 120k
Debt: 12k on my car, nothing else.
Ill probably be putting 15-20k down.
Offer price on the house will be 211k, comps have sold for 240-260k in worse condition.
I can easily do a 15year mortgage, any reason not to go for it?

211k house on a 120k income is actually living really modestly. I wouldn't sweat that decision at all. As long as you leave yourself with 5- 6 months emergency fund, I don't see any reason not to do it and not to go with the lower rate 15 year.

[jicasey]

Originally Posted by cschin4

Yes, there are lots of reasons NOT to get a 15 yr mortgage. I would encourage you to get a 30 yr. Why? Flexibility. Think about possible life scenarios. First, if you want to pay off a 30 yr in 15, you can do so with no prepayment penalty. So, you already have that option there. But, in real world issues, think about it. IF you are laid off, ill, disabled, have a period of decreased or reduced income, you will have an easier time swinging it for awhile and getting by if you are not locked in to the higher 15 yr payment. The 30 yr offers you some breathing room and the time you need breathing room is when things are tight. So, it is kind of like a bit of insurance on your house and your ability to keep current. Right now, you might not ever forsee any problems paying the mortgage, but I can tell you that time and nature and fate and circumstances have a way of popping up when you least expect it. So, i advise the 30 yr.
Having said that, we paid off our 30 yr mortgage in 7 yrs.

I agree in theory with your comment but not if you can comfortably afford the 15 year. If the interest rate is the same or similar, then by all means go with the 30 year.. But if the 30 year rate is something like 4.75% and the 15 year is around 4% and you aren't concerned about being able to easily afford the payments, it's smarter to go with the 15 year. Otherwise you are paying 75 basis points a year on a large loan unnecessarily. Great job on paying off in 7 years. Sure you paid more interest over that time than you likely had to because of a higher 30 year loan rate, but still, nice going.

[ukgaz]

This week the government introduced plans to make it a requirement that prospective homeowners have to put down a minimum of 20%

Consumers, lobbyists and others will now have until June 10 to submit comments to the Federal Reserve board regarding the new rules

[krantcents]

Originally Posted by steve85

I know everyone says to put down 20% when buying a house.
Putting 20% into the down payment wouldn't leave me with enough liquid savings to feel comfortable.
I'm on track to retire at 55, currently 25yo.
Income: 120k
Debt: 12k on my car, nothing else.
Ill probably be putting 15-20k down.
Offer price on the house will be 211k, comps have sold for 240-260k in worse condition.
I can easily do a 15year mortgage, any reason not to go for it?

If you feel uncomfortable with having enough liquid assets, you should delay buying a house. It is not an issue of 15 or 30 year mortgage, but the amount of your liquid assets.

[maat55]

Originally Posted by steve85

I know everyone says to put down 20% when buying a house.
Putting 20% into the down payment wouldn't leave me with enough liquid savings to feel comfortable.
I'm on track to retire at 55, currently 25yo.
Income: 120k
Debt: 12k on my car, nothing else.
Ill probably be putting 15-20k down.
Offer price on the house will be 211k, comps have sold for 240-260k in worse condition.
I can easily do a 15year mortgage, any reason not to go for it?

I don't know where you live, but if I had your income, I would be able to pay for my house with cash in 3 years(after living expenses). And you are telling us that you cannot save up 20%?

Here is the beauty of the 20% downpayment. Those like you who are in a hurry, would have to settle for less house(or wait longer), which would allow you to save up more money and move up quickly.

You need to rethink your mentality towards money. Adhering to sound barriers will allow you to prosper at all times.

[maat55]

Originally Posted by steve85

I'm not 100% certain rates will stay low. There's even a chance they might go lower after QE2 expires, but who knows. I don't think the housing market will go up anytime soon, but it is showing a lot of signs of stabilizing in my area.

If I were you, I would not worry about prices or rates. I would follow a sound plan at all times. You have plenty of income to save for a 20% down if you want it bad enough. The key to prospering is good priorities and sticking to them.

[cschin4]

I agree in theory with your comment but not if you can comfortably afford the 15 year.

But, that IS my point. That you can comfortably pay it NOW. That there are circumstances and issues and illness and job downsizings and disability and on and on that can then make it difficult or uncomfortable and that the 30 yr gives you breathing room and flexibility. And, there is no prepayment penalty so why not? The only real difference is that you will get a slightly higher interest rate on the 30 yr. But, if you are paying it off early that addresses that. So, yeah, I might have a paid a bit more interest in paying off my 30 yr loan in 7 yrs versus a 15 yr loan, but i viewed it as an insurance policy of sorts. And, you don't need insurance policies for good times, you only need it for hard times. So, don't financially strap yourself if you don't have too.

[AtoZ]

Home ownership should not be rushed. Remove the emotion from the purchase if possible and you will find little harm in waiting. In the amount of time it takes you to save your 20% and a 6 month reserve for unexpected items it is likely nothing will have changed and you might even get the same home for a better price. Best of luck.