Can a 30 year mortgage turn into a 15 year?

[FirstTimer90]

My wife and I make enough income to comfortably afford a 15 year mortgage payment. Due to past credit problems she has a low enough score which will increase the interest rate if she and I join our income and average our credit scores. If I apply for the mortgage alone we will have a better interest rate though my income will only qualify us for a 30 year mortgage. If we were to make payments equal to what would be owed on a 15 year mortgage to a mortgage set at 30 years (payment in excess of 30 year monthly payment would pay off principal), does that turn a 30 year mortgage into the same amount of money I would hsve paid with a 15 year mortgage?
Can anyone help?

[Nika]

It would be pretty close to it. What would the interest rate difference be?

[FirstTimer90]

It would be pretty close to it. What would the interest rate difference be?

Almost a full point.


Are there any online calculators where I could find out exactly how close it would be?

[feh]

If we were to make payments equal to what would be owed on a 15 year mortgage to a mortgage set at 30 years (payment in excess of 30 year monthly payment would pay off principal), does that turn a 30 year mortgage into the same amount of money I would hsve paid with a 15 year mortgage?
Can anyone help?

Not quite, because the interest rate on the 30 year mortgage will be higher than a 15 year.

[ua_guy]

Use any of the online mortgage amortization calculators and compare the two different scenarios. You'll need to know what interest rates you qualify for in either situation.

[FirstTimer90]

Use any of the online mortgage amortization calculators and compare the two different scenarios. You'll need to know what interest rates you qualify for in either situation.

Thanks. Can you recommend one?

[ua_guy]

Thanks. Can you recommend one?

The ones from Bankrate are pretty easy to use. I can't remember if it lets you export the data to Excel for your own manipulation, however.

[cschin4]

I always took out a 30 yr, even if I could afford a 15. Why? For flexibility. If for some reason you become ill, disabled, etc, then that 15 yr payment might be much harder to manage. If you take out the 30, you can prepay it as early as you want too. And, yeah, you might pay slightly more interest, but I like the flexibility of that.

[Petunia 100]

You might see if you can qualify for a 20 year. The rate will be better than the 30. Of course, you can still pay it off in 15.

This is my favorite mortgage calculator: http://www.bankrate.com/calculators/...alculator.aspx

Once you know the scheduled principal & interest payment, it is very easy to set your mortgage up on Excel. As you make each payment, replace the scheduled p & i payment with your actual p & i payment. Everything recalculates.

[agarlits]

My wife and I make enough income to comfortably afford a 15 year mortgage payment. Due to past credit problems she has a low enough score which will increase the interest rate if she and I join our income and average our credit scores. If I apply for the mortgage alone we will have a better interest rate though my income will only qualify us for a 30 year mortgage. If we were to make payments equal to what would be owed on a 15 year mortgage to a mortgage set at 30 years (payment in excess of 30 year monthly payment would pay off principal), does that turn a 30 year mortgage into the same amount of money I would hsve paid with a 15 year mortgage?
Can anyone help?

You're going to pay less interest overall on the 15 year mortgage, as a general rule of thumb if you can afford it the shorter term is always better.If not you run the risk of getting "comfortable" with your monthly bills and defaulting to making only the minimum payments on the 30 year mortgage. Who wants to be locked into a loan for 30 years anyway?

[greenskeeper]

we took out a 30yr for flexibility. We are on pace right now to pay it off in 12yrs, hopefully shorter (we throw everything extra each month at the mortgage)

[FirstTimer90]

You're going to pay less interest overall on the 15 year mortgage, as a general rule of thumb if you can afford it the shorter term is always better.If not you run the risk of getting "comfortable" with your monthly bills and defaulting to making only the minimum payments on the 30 year mortgage. Who wants to be locked into a loan for 30 years anyway?

I agree and don't want 30 years worth of debt.
I also may be wrong but aren't the first few years of a 30 year mortgage almost all of paying interest and very little to the principal? So my worry is that I will pay this off in 15 years but still pay the same about of interest on a 20 or 25 year mortgage. But I may be wrong about this and hope someone hear can clear this up.

[Petunia 100]

I agree and don't want 30 years worth of debt.
I also may be wrong but aren't the first few years of a 30 year mortgage almost all of paying interest and very little to the principal? So my worry is that I will pay this off in 15 years but still pay the same about of interest on a 20 or 25 year mortgage. But I may be wrong about this and hope someone hear can clear this up.

Yes, in the beginning of a 30, most of the payment goes towards interest if you pay as scheduled. Interest accrues each month on the principal balance. Reducing the principal faster than scheduled reduces the interest accruing each month. If you choose to pay your 30 as if it were a 15, you certainly can do so. You will not end up paying the same amount of interest as with a 20 or 25 year mortgage.

Your situation is a bit unusual, as generally a 15 year loan has a lower rate than a 30 year loan. If the lowest rate you can get is on a 30, take the 30.

[feh]

I agree and don't want 30 years worth of debt.
I also may be wrong but aren't the first few years of a 30 year mortgage almost all of paying interest and very little to the principal? So my worry is that I will pay this off in 15 years but still pay the same about of interest on a 20 or 25 year mortgage. But I may be wrong about this and hope someone hear can clear this up.

No, that is incorrect. Let's say both a 15 year mortgage and 30 year mortgage have the same interest rate. If you paid ahead on the 30 year so that it was paid off in 15, you'd have paid the same amount of interest as if you'd had the 15 year mortgage.

Of course, the interest rate won't be the same, and that's why you'd pay more if you decide on the 30 year option.

[agarlits]

I agree and don't want 30 years worth of debt.
I also may be wrong but aren't the first few years of a 30 year mortgage almost all of paying interest and very little to the principal? So my worry is that I will pay this off in 15 years but still pay the same about of interest on a 20 or 25 year mortgage. But I may be wrong about this and hope someone hear can clear this up.

You're correct, as well as most of the other posters that have answered you. Having worked in the banking industry I have some uncommon insight into this though. The reason people take out mortgages and buy homes is because owning a home is one of the best ways you can increase your net worth. As you make payments every month the amount that goes on the principal (the actual loan amount) increases the equity of the home. That is the amount that the house is worth compared to what you owe on the loan. But the financial institution has to make money on the loan so from day 1 you will accrue interest on the total loan amount and for the first few years because it is a new loan you will see that the amount you pay in interest is generally much higher than what you are paying on the principal amount. However if you intend to finance the house with a 30 year mortgage at a lower interest rate than what you would have on the 15 year mortgage I would advise splitting the payment up every month. Pay the amount owed on the mortgage when it is due, then make a second payment sometime during the month and specify that the second payment be applied strictly to the principal amount. This will help you lower the principal amount more quickly and since interest only accrues based on your principal it will decrease what you will pay in interest over the life of the loan.