Who has a 15 year mortgage? What led you to that decision? How much are you able to contribute to savings with the higher mortgage payment?
DH and I are going to refi (we did a cash out refi late last year and are ready to reset our rate. We are debating between a 30 yr fixed and a 15 yr fixed - the difference is $700ish/month. But it locks us in to a great rate (3.3%).
hostess / wonderful persimmon / 25556 posts
@Mrs D: we have a 15 year. We were paying as if our 30 year was a 15 year before we refied. We both feel that paying off the house is important so 15 years is a great way to it quickly.
I think when it comes to doing that, you have to look at how comfortable you will be paying a 15 year and then how much wiggle room that gives you to save elsewhere.
coconut / 8854 posts
We have a 15 year loan! It's amazing so much more goes to principal. We bought a house that was very low in price though and the rates were so great at the time we locked in at 3.375, and it was only $100 difference per month for us between a 15 yr and 30 yr mortgage. So it was a no brainer for us!
wonderful pomelo / 30692 posts
We have a 15 year. We originally had a 30 year fixed rate mortgage, but was able to refinance and save about 2% on interest with our 15 year mortgage. The mortgage payment is about $400 more, but in the long run, we'll save $$$$, so it's totally worth it!
That said, with the higher mortgage payment, plus two kids in daycare now, we're not really able to put much away in savings (though we are still maxing our 401ks).
grapefruit / 4545 posts
@mediagirl: @Adira: This is my area of stress...it takes my positive cash flow each month down to $1200...which just scares me. I just made another board about that. I just love the idea of owning our home at 47ish...long before retirement. Plus other than kids in college - I think we are in one of the most expensive points in our lives (2 kids in daycare, student loans).
@MrsBrewer: Thats AWESOME...only $100 diff is a total no brainer!!!
wonderful pomelo / 30692 posts
@Mrs D: Yeah, not having much go towards savings each month kind of stresses me out, but we have a good amount of savings to begin with, and we figure that if we continue to get the minimum merit increases at our jobs each year, we'll start coming out ahead again in a couple years. Plus in another few years, daycare costs will drop significantly when the kids start school, so it'll all work out in the end!
kiwi / 548 posts
I think it depends on your priorities. Preschool, nannies, etc. are expenses that are very high now that won't last forever and we also felt that putting more in the 529s so that the money can grow tax free was a priority for us. I also love traveling with our family, so it isn't something I wanted to put off just to have a mortgage paid off. We also have a 30 year APR less than 3% and aren't in our forever home, so that helps justify things too. I think if you feel like your life wouldn't be any different with that $700, I would go for it! But, if you have to make scarifies, then I wouldn't bother. You'll never have this time back, so make you won't be stressing yourself out (especially because you will likely have a higher salary in 15 years too!).
wonderful olive / 19353 posts
For $700 more, I'd say no and just put any extra payment towards a principal payment only. Unless you have plenty of cash flow remaining and the extra $700 doesn't affect you (too much).
We have multiple properties, all with 30 year loans. However, I'm paying one of them down aggressively where I'm paying the regular payment but also paying a principal amount a couple weeks later (so it's like a bi-monthly payment). I'll have that mortgage paid off in 6 years!
eggplant / 11824 posts
I just responded to your other 15-year/cash-flow question. We have a 15 year loan, and don't regret it at all! For me, I always have the best intentions of paying extra on my mortgage each month, but I don't. So, a 15-year works well for us because we can afford the payment, but are not always likely to actually pay the extra each month if not required to do so. If you're less lazy than me, maybe it doesn't make a difference. 
grapefruit / 4545 posts
@yoursilverlining: Ya - I worry we'll be the same way...plan to put extra $ towards it then not! Plus - I just ran the numbers and if we refi with a 30 year but make an additional $500 payment each month we are still paying 2 times the interest - albeit it would only be a 20 year commitment as opposed to the full 30 years.
@Alivoo01: We'd be cashflow positive $1200 with the 15 year - so $1900 with the 30 year. $700 is a significant portion of that but I'm not sure it changes the lifestyle - except maybe travel. But how extravagent of travel will we really do in the next 5 years (until Daycare and student loans are gone - equaling $3-4K more per month) with two under 5?!
clementine / 880 posts
What is the rate for the 30 year?
The textbook answer to this, without taking in emotions ("relief" of paying down a loan faster / "stress" of higher monthly mortgage, etc) is that if the 30 year rate is lower than what you could earn investing the difference, you should take that. For example, if the 30 year rate is 4% and you can earn 7% a year in the stock market (401k, 529, roth, etc) you should take the 30 year and invest the extra $700/mo instead of taking the lower rate loan and "tieing up" that money.
But that doesn't take emotions or actual behavior (would you really invest the $700 difference?) into account. It does point out the opportunity cost of a higher mortgage in terms of "lost" investment earnings which is something you should consider
coconut / 8079 posts
We have a 15 year mortgage. We already had a large emergency fund before we bought our house. We aren't saving large amounts of money each month because I'm mostly SAH just now, but it's working for our family.
coconut / 8430 posts
Yes, I love the idea of paying off our mortgage when we're still in our 40s. We also refi-ed to an insanely great rate of 2.75% so that was a huge motivator for us to do it, even if we could theoretically invest in the market and potentially do better.
grapefruit / 4355 posts
We have a 30 year because we were able to get a very good interest rate (3.875%) and that left more money that we would be able to invest in retirement accounts, mutual funds, etc. which should make us a higher percentage than the interest rate that we are paying on the loan.
olive / 62 posts
If you can swing the higher payment, go for the 15-year. You may have a short-term cash squeeze, but think how much you'll be saving on interest. Really. Do the math. Also, you'll be building up equity faster.
pomelo / 5866 posts
We refinanced to a 15 year a few years ago at 2.6 percent. The lowest ever seen according to our appraiser. We want to pay it off ASAP and be completely debt free.
GOLD / wonderful apricot / 22646 posts
We refi'ed for a 15 year @2.75% the savings alone from how much more goes toward principal vs interest sealed the deal for us, our payment didn't rise much either; so either way it was the right choice!
wonderful clementine / 24134 posts
We really need to refinance but we are considering either relocating to be closer to family or moving houses locally. So it doesn't make sense to do it now 
grapefruit / 4545 posts
The way the mortgage lender explained it to me was this:
"For $533 more in payment you are getting $1150 more in principal payment"...that what was made it really hard to turn down the 15 year option.
@mrsjyw: who did you do you refi through? Thats a great rate! (I know we are in the same area)
GOLD / wonderful apricot / 22646 posts
@Mrs D: my husbands in banking, I'll wall you, we refi'ed a couple years back, I think rates are on the rise but still low.
coconut / 8861 posts
We have a 15 year mortgage on our condo. What everyone's not saying is that you get back your principal when you sell. When our condo sale goes through, our principal is going to be used as part of the downpayment on our new house. Instead of having no money after selling and buying, we'll be okay and can pay for much needed renovations.
eggplant / 11716 posts
@Mrs D: how much do you have left of the loan (like, in percentage?). How soon are you trying to pay it off?
There are some other creative ways to pay off a home loan fast if you have a lot of equity in it.
grapefruit / 4545 posts
@cascademom: Yes - our house is likely our forever home...so we dont plan to sell but we do plan to do a large reno some time...so having a lower principal balance will help our home equity line process.
@Anagram: We bought 1.5 yrs ago then did a massive renovation of the house - think Property Brothers. Then - 8 mos ago we did a cash out refi to get rid of some of DH's 10%+ student loans...so now we have a loan that is about 78% of our value (at time of refi) - but likely now it will be more like 70% with appreciating values plus finishing the basement which we paid cash for.
I have run the numbers on paying the extra $500 straight to principal but it still lands us with a 20 year mortgage and $170K in interest - vs 15 year with $98K in interest.
grapefruit / 4321 posts
We have a 30 year because of the reasons @LaughLines: listed. We calculated it and we end up better in the long run by investing the difference rather than paying off the mortgage faster. We actually DO invest the difference, but that takes a lot of self control, so you have to know yourself. Also, I just liked the flexibility of the lower payment if God forbid one of us lost our jobs etc, I liked having smaller bills that HAVE to be paid no matter what. We bought our dream house so even at a 30 year or mortgage payment is a hefty number. If we were in a less expensive house, I wouldn't have been as concerned about increasing the monthly payment.
pomegranate / 3393 posts
I'm happy with our 15 year mortgage. The interest rate with our refi was so much lower that our monthly payments didn't actually change that much. I get a weird nerdy thrill knowing we'll own the house in 10 years or so.
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