🏡 Why people rarely get a 15 year mortgage  

I’ve got a 30 year mortgage. My dad put it simply “If you want a 10 year mortgage and you come on bad times, they’ll shaft you to change the terms as they know you’re in a bad spot, if you get a 30 year mortgage and you win the lottery, they aren’t gonna say no to the money now. Also if in 15 years you want to move to a bigger property, they just reset everything” I’ve seen all the arguments about paying early etc, but for a mortgage it is best to have maximum security and stability. Go for as long a mortgage as possible and if you have extra cash, put it in savings. if a rainy day comes up, you’ll be happy it happened.

Bingo! This was my thinking.....except that at the time my 15 year was only $80 a month than the 30 year. I figured I would always be able to pay my mortgage. Now I would absolutely do a 30 year and pay at a 10 year rate. RULE of THUMB.... By the way 1% of interest on 140k equals $100 per month.

This, and knowing your budget yourself (aka not having the banks do it) is how my parents survived the 2008 housing market crash.

I’m on a 15 year and plan to pay it off in less than 8. It’s all about what you’re comfortable with. The 30 year mortgage was a product designed to allow stagnating wages to keep up purchasing power parity with faster rising real estate prices. A 30 year gives you a false sense of what’s affordable.

NO "Early Paid-in-full Penalties"! - just make sure paying off your loan early doesn't incur penalties.

No cap I did this and just got my first place, genuinely everyone thought I was insane, I got a plan that allows me to overpay as much as I like without penalty and I can afford paying double the minimum each month, now I have a roof over my head that no-one can take away from me.

This is how my mom did it, she paid for her house 10 years early cuz she always paid extra on the mortgage no matter what even if it was a few dollars

This only really applies if you are planning on paying off early. If you aren't pick a property you will be able to afford the payments on even in downturn, and invest your money at a higher interest rate than the rate if the loan.

"Sign me up for the 30 year mortgage" "Ok"

Also technically you have 15 more years of a fixed mortgage which means you have apx 2% extra inflation per year for 15 years so you pay even less than it seems over time.

The forced self discipline the 15 year loan brings is more important Many people “plan” to pay early but don’t.

Not entirely. With a 30-year mortgage you're obligated to pay less at a higher interest rate in most cases. A 15-year mortgage you're obligated to pay more of course. The real issues lies with who your lender is. Some may penalize you for paying off your loan early (rare but does happen these days). Additionally, you can get the 15-year mortgage and pay off a good chunk of your mortgage and accrue less interest then refinance for a 30-year and get a lower monthly payment. This also works with a 30-year to 30-year refinance but you'll accrue more interest. Just do whatever you're capable of doing. Chances are, you can just refinance down the road. Building up your credit should be your first step, that interst adds up. 40-year mortgages also exist where the first 10-years are interest only payments. This can be useful when you want to build a portfolio by buying a rental property.

Horrible advise. If you can afford it a 15 year loan is always better. Save you over $200,000 in interest. Fool!

15-year mortgages make sense when you are refinancing an old loan, or if your mortgage payment (with property and school taxes) is well below 25% of gross income. Granted, lenders don't like 15-year mortgages and make it hard to qualify for them, because they don't make money from them like they do on 30-year loans.

Best piece of advice I've ever seen on this channel. Nice job

Great in theory but always do the math yourself for your specific situation.

*laughs in "the bank would not even offer me a 20 years mortgage"*

I used the CARES act during covid to put my mortgage into forbearance interest free and continued making payments that were applied directly to my principal. Then, during the auto shortage we sold an extra vehicle and used the equity from that sale to buy a vehicle for cash which eliminated a 20k car loan. We're currently sitting on 100k equity in our home with a DTI of 20 percent.

This is the first actual good financial advice I have ever seen from a RU-vid short.

That's what I did, I chose a 20 year but aim to pay it off in 8 🔥

Love your info! Less stress in deed.

30 year mortgage is awesome Can I vest money in the mean time and the loan basically pays for itself

This is what I did when I purchased my motorcycle. I knew If things ever got bad. I could always afford the payment that I selected. But I could always pay a little more to avoid to much interest.

This is actually good, especially for those that want 1 house and done and never move ever again.

I originally got a 15 yr term but after an aneurysm I had to refinance, thankfully I made lots of extra payments and rounded up (Around $50)and paid the difference toward principle every month I believe that is the only reason I didn't lose my house during my coma( I took care of all finances so when I was in the hospital my wife didn't pay any bills)

FOLLOW THIS SMART PERSON!!! They know what they are doing!!!!

Personally, I learned this from my mom. She did the 30 Year Loan and she was able to pay the monthly payment each paycheck. She made sure there was NOT an Early Closing Fee. Also, when she paid the second payment per month, she made sure to pay it on the Principle or Base Price. That way, in the long term, there was less interest charges. My mom is a very wise woman.

Fun fact mortgage means death pledge

I did the 30year which gave me flexibility to pay off in 10, 15 years if need be. Why be committed to higher monthly mortgage versus self discipline of paying extra during the 30 years? I’ve had 4 jobs in 13 years with different pay (20k) at times which so the 30 year was best. Look at the pre payment calculator for your loan and will see the interest saved by extra payments is huge example /motivator of potential money saved. I’ve done nothing for years , extra monthly payment for years and lump sum. Pay off credits cards first before extra payments.

This was the strategy my partner and I came up with for when it comes time for us to get a house. Good to know we're backed up by someone that knows more than us lol

ONLY BRO THATS A LOT

A tip i have, when i bought my car i asked for a loan from my bank before hand not going through a dealership. But i also had about $10,000 saved which would usually be used as a down payment. So 0 down i got a 35k car, but i am making payments plus extra using that 10k i saved. That way i build my credit and will pay less in APR in the long run

Bought my house for a 30 year note. Refinanced a year later, had my closing roll into the loan, and my payment went up only $2/month. So while technically correct, I saved $108,000. But due to getting hammered by an amortized heloc it was a 20 year note consolidated into a 5 year note, I almost lost in preforclosure. I would always suggest a 30 year note however for those market swings.

Get the 30 year loan...pay it off 2 years later....loan canpany rages....

The concept of a 30 year fixed rate is such a foreign and “US” idea for us in Australia and NZ, we don’t do anything near that

90% of people who say this don’t commit

I agree with this, I did 30 and paying 3 times the principal. Its working for me. I am almost 1 third paid off in a little over 2 years. Its a small home though but my strategy is to pay it off then live rent free and save up for retirement

You pay significantly less interest in a 15 year loan vs a 30 year loan A 30 year mortgage could be one of the worst finacial Instruments for the consumer

You also left the part out where you get shafted if there is a inflation since your interest rate goes up since you are on flexible interest rate. The only way to get fixed one (at least in my country) is to have 10 year or lower mortgage. So its more of a tradeoff

I never knew this was a strategy, when I got my car, I took the longer term not knowing anything. Turns out that was probably the best decision. I’m paying more than my monthly payment and I’m on track to paying off my loan in 2 years. I had originally had a 5 year contract. It’s good knowing if anything happens, I can pay the minimum and not lose anything.

Taking real estate classes hopefully there will be some great tips 😊

Yeah yeah most people don't have the discipline to pay extra if they don't have too

My parents did this and paid a 30yr loan off in 10yrs with only my dad working a job at a recycling plant. Mum worked cash jobs in a restaurant but not often

Yea but in the long run your still paying a lot more. Even if you pay it off in less than 15 years there are penalties

Anyone who buys a property at current interest rates and real estate prices is very sadly misguided. Interest rates went from 2 to 6% in about a year while the median house price is about $500k. If you lock yourself into a 30 year mortgage before the coming real estate crash, you’ll pay about 1.5 million for that house over 30 years.

Never make extra principle payments. Either save the money for down the road (emergency) or invest it. If you invest it at a higher interest rate than the loan (which can be common in houses), you end up making free money for future payments.

We've done both with our investments and it is good to consider both options. The 15 year option will also cost you less in terms of the interest rate, but if you can't unconditionally afford it, you should consider the 30 year option and pay it down sooner. The difficulty is that many people spend more when times are good rather than committing to pay down that 30 year entanglement. If you have no willpower and good income, the 15 year option may be better for you.

that is what I did. They would not qualify me for a 15 year fix rate. so I accepted a 30 year flat rate. I paid it off in 11 years. :) Now I invest my mortgage payment. I am happy. I feel like I beat them.

I tried to explain that to a friend 3 years ago and they wouldn't listen . They're depressed now struggling

People rarely get a 15 year because banks want you to get a 30 year. And people can't afford the 15 year. A 30 year loan your still paying off interest until year 16

I tell my clients that longer terms have higher rates, but we don’t charge fee for early payoff. Since I work on debt consolidation, the smaller monthly minimum can make a huge difference

If you pay a 30 year mortgage like you were paying a 15 yr mortgage you would still have paid more compared to an actual 15 year mortgage. It's pretty simple when you look at a spreadsheet.

That's why I rock a 20yr. Good balance between low interest rate and more affordable payments. If I ever really need to I can refinance back to a 30.

Be careful some banks might not let you pay if off faster

wrong. if you can't afford the payments at 15 years then you have too much house

In my country we have a saying "e la mintea cocosului" meaning its so intuitive even a chicken could figure it out

Except most mortgages penalize you for paying it off faster so...

Another reason to get a 30 year is inflation!

Can‘t do this because there is a limit to the money I can pay in per year extra, so if I‘m REALLY well off, I still can‘t really pay off my property

yeah you are paying more for longer plans

Or if you can’t afford to pay a 15 year loan with extra payments to pay off even faster like you would with a 30 year loan maybe you shouldn’t be buying a house in the first place

Did this with my car loan, didn't realise people didn't know. Mind you it was nowhere near 30k 😅

This is the exact idea I was thinking for a car!!! First car loan I’m going to have to date (always paid in full) I have 12k saved up for the Down payment and am going to do 7 years and hopefully pay it off in 3❤️. But with the recession we’re in now, and housing prices going up, I want the added security in case something happens in the future. I love that someone else is recommending this!

The main thing is the FIXED MONTHLY payments. Inflation, nope still fixed as a general rule most RE experts use 30 year

Sitting here paying £460 a month mortgage on a new house guaranteed for 10 years while I have friends renting 1 bedroom apartments for nearly double that!

Don’t you get a penalty if you pay off too much principle too fast

Never pay off your mortgage early, mortgages are the cheapest form of debt, the money that would have gone towards paying down your mortgage will appreciate faster than your interest payments if you invest it.

This is a bit different in Canada. Unless you applied for an open loan, which people usually don't do that here. Because the interest rate could be double or even triple compared to a closed loan. At most, we could pay 10-20% more annually.

I want a neg-am loan so I never payoff my property. But I have low payments.

Interesting hearing your comments of the American market. Some can be applied across the pond but some of your advice I would say is most definitely apparent to your market conditions. Again, interesting to hear the similarities while the intricacies are probably different on a number of points but process remains relatively similar. Global markets n all

Yeah get the more expensive property so your payment is as much as the 15 year mortgage over 30 years. Makes perfect sense.

This is exactly what I do.

A lot of people plan for this but don’t end up making the extra payment, if you’re going to do this commit early and commit completely

Why would you want to pay off the principal faster if your loan interest is so low? Interest for many owners is 3% and inflation is over 8%. You can even stick it in an I bond and make 9%. Anyway, the simple answer is that you can afford a more expensive house with 30 years. And with inflation, the payment towards the end of the 30 year loan is going to be so cheap in today’s money, so the interest saved doesn’t matter

This guy made a reversed video last year 😂

This is GOOD advice kids, listen!

People underestimate the value of having flexibility.

Isn't it the other way around? That 30-year mortgages have lower interest rates than 15-year? 🤔

This is what I tell everyone, always go for the longer loan. That why you can pay the principal down fast. And some loans will even, when you finish the loan early, recalculate the loan and give you back the difference sinc the total loan with interest is calculated at that start of the loan. Though this only applies to fix rate loans. And when people ask me what happens if the market drops and my rate is to high, I normally tell them depending on their credit they could always refinance the loan with the lower fixed rate. NEVER GO ADJUSTABLE RATE unless you have the capital to pay the loan completely if it goes up.

Do not do this. Instead, get the 15-year loan and then also get a HELOC then withdraw against your HELOC to subsidize your payments when times are hard and have the lower interest rate. You will pay less in interest and keep your flexibility.

ARE U SURE this is right? most people say 15 year.

True always pick 30 even though you pay it of way early then plan but you have emergency that you have reduce extra payments. Never put it on internet one, the principal is the correct one. By add money to principal you keep doing it will reduce years to pay back the money and reduce interest on it. My family did it on a 30 year loan and pay it off in 12 years or right at 15 years. Saving 15 to 18 years on the loan aka interest on it.

This enabled my wife and I to have a family AND a summer vacation while still owning a home! 😉

One extra payment a year on a 30 year loan will cut 11 years off the life of the loan

Exactly what I do for small payoff investments from Affirm

I learned not to reveal my plan to people who contril loans, like banks, bank tellers... ATMs...

Then in this case get a 7/1 or 10/1 arm. You get an EVEN lower payment and when you paybit lower you decrease the risk after the locked term

U have to pay fees if u finish it early tho…

Do the 15yr and leave the taxes and insurance separate for lower payment

Now boom. You have paid thousands in early prepayment fees. 🤣

Stupid advice with how high interest rates are. A 15 year is only about a 20% higher payment, not the 80% higher payment it was with a 2% interest loan

I was actually looking to see if there were options for a 3 year or 5 year mortgage.

Advice like this is great. Please, no more sketchy stuff.

I’m just here because Sean is cute.

This is good advice.

YES! I amortized my 30 year loan to a 15 year loan befor my first mortgage payment..

Mortgage interest rates on a 30 year loan are almost always lower than a 15 year loan, not higher.

Jezus that is very expensive mortgage.

Oh, he is so correct!

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