Why do people get 30 year mortgage loans?

12-28-2020, 02:32 PM

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#1

MikeLowrrrey

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Why do people get 30 year mortgage loans?

I understand you can invest more money with a 30 year loan, but how many people actually put money to the side? And the thought of having to pay something for 30 years is daunting imo

If I can't pay the house off in 15 years I can't afford it, even if it means saving for longer

12-28-2020, 02:33 PM

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#2

tripod29

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Because they are poor.

12-28-2020, 02:34 PM

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#3

Bigbuster1
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Homes are expensive, so they do 30 years to keep the monthly price to something they can afford

12-28-2020, 02:34 PM

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#4

wincel
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Usually, if you take a fixed 30 year mortgage, you will 1) pay less monthly and 2) gain an additional discount due to reduced risk to the lender.

12-28-2020, 02:34 PM

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#5

Visel
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It keeps their monthly mortgage rate hundreds of dollars lower. They are still given the flexibility of being able to pay it off whenever they want when they've saved/invested enough, and simultaneously they can solely stick to the lower 30yr payment when times are tougher for them. They (hopefully) do not actually intend on being in debt on that house for 30 years, and would likely sell it early anyways, or pay it off way in advance.

12-28-2020, 02:35 PM

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#6

Roke
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Because they assume instead of paying rent for 30+ years it would be better to invest in a property they can sell or keep.

I suppose there is no right or wrong answer just depends on the location, quality of town, neighbours, GDP of that county, etc.

12-28-2020, 02:36 PM

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#7

Kewbrah
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Don’t know how it works in USA but Strayans can pay off their 30 year mortgage any amount of time they want between 1 day and 30 years

12-28-2020, 02:36 PM

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#8

MikeLowrrrey

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Originally Posted By Visel⏩

It keeps their monthly mortgage rate hundreds of dollars lower. They are still given the flexibility of being able to pay it off whenever they want when they've saved/invested enough. They (hopefully) do not actually intend on being in debt on that house for 30 years, and would likely sell it early anyways, or pay it off way in advance.

So would it be best to get a 30 year loan and then pay extra? I imagine with a bigger down payment it would come out the same with monthly payments

12-28-2020, 02:36 PM

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#9

MrBourbon
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Get 30, pay in 15. Interest is a little less favorable but it's worth the flexibility it gives IMO.

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12-28-2020, 02:38 PM

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#10

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30 Year fixed rate offers the most flexibility. You can pay it off early if you want - there's no requirement that you have to spread the payment out over 30 years. Also, if you find yourself in a jam, for example losing your job, your payment will be lower than a 15 year.

With 15 year, there's less flexibility.

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12-28-2020, 02:39 PM

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#11

shmobin
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Originally Posted By MikeLowrrrey⏩

So would it be best to get a 30 year loan and then pay extra? I imagine with a bigger down payment it would come out the same with monthly payments

Yes. Get a 30 year loan and make 13 payments a year.

12-28-2020, 02:39 PM

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#12

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12-28-2020, 02:41 PM

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#13

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Originally Posted By MikeLowrrrey⏩

I understand you can invest more money with a 30 year loan, but how many people actually put money to the side? And the thought of having to pay something for 30 years is daunting imo

If I can't pay the house off in 15 years I can't afford it, even if it means saving for longer

I'd have a 15 year loan if I could have afforded it. Instead, I am paying down extra when I can, which ends up being the same, but not being locked in if I have a bad month.

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12-28-2020, 02:43 PM

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#14

AWSbruh
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12-28-2020, 02:43 PM

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#15

MuzzieChik786
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Lower payment means you can send extra each month which will directly hit your principle instead of going towards your interest.

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12-28-2020, 02:43 PM

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#16

Visel
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Originally Posted By MikeLowrrrey⏩

So would it be best to get a 30 year loan and then pay extra? I imagine with a bigger down payment it would come out the same with monthly payments

Save up 20% for down payment. Maybe even more if you want. Put it on a new property signing up for 30 years. Pay 12 payments per year, while building up money on the side in investments, maybe toss an extra few thousand per year at the loan just to demolish some interest. Probably by the time you're somewhere in the 10-15 years range, you can liquidate the investments and finish paying off the house.

12-28-2020, 02:44 PM

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#17

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Because I am broke and that lottery win has not happened yet.

Need a longer mortgage term to meet affordability criteria.

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12-28-2020, 02:47 PM

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#18

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Originally Posted By Kewbrah⏩

Don’t know how it works in USA but Strayans can pay off their 30 year mortgage any amount of time they want between 1 day and 30 years

It's the same here, but why pay off early with such low interest rates?

12-28-2020, 02:48 PM

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#19

poundXpound
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Originally Posted By MikeLowrrrey⏩

So would it be best to get a 30 year loan and then pay extra? I imagine with a bigger down payment it would come out the same with monthly payments

Even if you can afford the monthly payment on a 15-year mortgage, it's better to take the 30-year and pay the 15-year amount. If an emergency comes up where you need extra cash for something and don't have the savings, you can make the normal payment on the loan and use the extra for the emergency. If you take a 15-year and have that emergency, you'd have to come up with the money from somewhere else.

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12-28-2020, 02:48 PM

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#20

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Originally Posted By MikeLowrrrey⏩

I understand you can invest more money with a 30 year loan, but how many people actually put money to the side? And the thought of having to pay something for 30 years is daunting imo

If I can't pay the house off in 15 years I can't afford it, even if it means saving for longer

If I can't pay the house off in 5 years I can't afford it, even if it means saving for longer

The thought of having to pay something for 15 years is daunting imo

12-28-2020, 02:51 PM

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#21

SouthDakotaBrah
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I have a 15-year mortgage @ 2.7% annual interest, could have had a 30-year mortgage @ 3.7% annual interest. Kind of regret not going 30-year because its almost assured that over the next 30 years, the broad stock market should exceed 3.7% in annual return.

12-28-2020, 02:53 PM

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#22

jfindon
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If you can't pay cash for it, you can't afford it. Stupid saying is stupid. 30 years give you more wiggle room for everything stated in this thread, get it and pay extra if you want. With the ****show this world is right now, I'll take a better house for less monthly payment in case, god forbid, I lose my job and have to struggle to make ends meet for awhile.

Even if you can afford the monthly payment on a 15-year mortgage, it's better to take the 30-year and pay the 15-year amount. If an emergency comes up where you need extra cash for something and don't have the savings, you can make the normal payment on the loan and use the extra for the emergency. If you take a 15-year and have that emergency, you'd have to come up with the money from somewhere else.

Exactly. It really isn't rocket science.

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12-28-2020, 02:55 PM

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#23

AWSbruh
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Originally Posted By SouthDakotaBrah⏩

I have a 15-year mortgage @ 2.7% annual interest, could have had a 30-year mortgage @ 3.7% annual interest. Kind of regret not going 30-year because its almost assured that over the next 30 years, the broad stock market should exceed 3.7% in annual return.

You can get a 30 year mortgage with less then a 2.7 interest rate now. It’s time to refinance

12-28-2020, 02:58 PM

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#24

wincel
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*make fun of people living at home with parents in paid off luxury house*
*take hundreds of thousands of dollars in loan to pay for own place*
*wageslave and then pretend you are being savvy*

The American way...brought to you by the banks. LOL

12-28-2020, 03:00 PM

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#25

GordonXXX
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because people want to buy more house than they can afford. until the shiit hits the fan and then they cry and blame the evil banks and demand a government bailout from taxpayer money.

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12-28-2020, 03:08 PM

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#26

MikeLowrrrey

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Originally Posted By Visel⏩

Save up 20% for down payment. Maybe even more if you want. Put it on a new property signing up for 30 years. Pay 12 payments per year, while building up money on the side in investments, maybe toss an extra few thousand per year at the loan just to demolish some interest. Probably by the time you're somewhere in the 10-15 years range, you can liquidate the investments and finish paying off the house.

Not many folks do this though. I think 15 is better for everybody, it means a smaller house however

12-28-2020, 03:10 PM

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#27

MikeLowrrrey

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Originally Posted By poundXpound⏩

Even if you can afford the monthly payment on a 15-year mortgage, it's better to take the 30-year and pay the 15-year amount. If an emergency comes up where you need extra cash for something and don't have the savings, you can make the normal payment on the loan and use the extra for the emergency. If you take a 15-year and have that emergency, you'd have to come up with the money from somewhere else.

Unless you have a bigger down payment and the 15 year payments are about the same as a 30 year.

I understand what you're saying though

12-28-2020, 03:11 PM

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#28

FrankGrimesJr
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Does it make financial sense when someone has paid 5 years into a 30 year mortgage and refinances for a lower interest rate at a new 30 year term?

12-28-2020, 03:13 PM

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#29

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Originally Posted By wincel⏩

Usually, if you take a fixed 30 year mortgage, you will 1) pay less monthly and2) gain an additional discount due to reduced risk to the lender.

This is completely false. You gain an additional discount for shorter mortgages (10-15yrs) because a shorter payoff period is less risk for the lender.

Please do your research before posting blatant lies, you fantastically retarded assclown.

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