30 year at around 3.5% or below is pretty much free money due to inflation. By having a lower payment at a low interest rate you can make about 7% more per year investing the extra money into a S&P index fund preferably in a Roth account. With a 30 year you can pay extra and it can be a 15 year, but nice having the lower payment if you needed to. I could pay my mtg off if I wanted to for example, but that would be silly when that money is making more in very simple investments that I have on autopilot.

Depends. Usually if the new rate is 1% or more (lower) it might make sense. Just got to watch for fees, points charged etc. I refinanced a few years ago @ 3.5% could get a lower rate now, but not worth it. I’d be better off just putting the refi costs on my existing balance. Excel amortization sheet is a good tool to use to look at different things.

That's actually incorrect. I have income.

Like everyone already said, you can’t beat the flexibility of a 30 year fixed rate
Pay extra on the principal and pay it off early if you want to
Much lower minimum payment for when times are tough



Just refinanced in September to a 2.25% 30 year fixed
Bought my house about a year before that on a 4.25% 30 year fixed
Cut my monthly housing expense by 24% at zero cost to myself (other than a couple hours for paperwork lol)

Bought my first house for $85K (15 year loan) paid off in 10, sold it after 12 for $250K. I think I did ok. Honestly I have not compared the gains in the stock market over the same time to see if the money I used to pay it off early would have made me more money in the stock market but still almost tripling my money in 12 years is ok by me. My next house I followed the advice in this thread and took out a 30 year loan for the flexibility of being able to make smaller payments during times like COVID etc.

i bought my first house at 21 for 320k, and sold it for 650k at 30. at 32 i bought my place for 840k and will pay it off for 30 years. sure i could pay it off quicker, but i want the flexibility, being able to go on holidays once a year. its a good balance. i always have the option to pay it off sooner too

^^^yes

Only minor qualification being if you entered into a fixed loan but that’s max 5 years and you can still repay early up to a limit, then there’s a penalty

Umm what? The extra amount you pay in a 15 goes directly to your principle.

i was working as a tradie since 18 years old. i saved up a 30k deposit, and my partner had saved about the same. we had about 64k, and got about 15k from the government under a "first home buyer" scheme

Because it's good for the bank. And it's easy to sway people from a 15 to 30 yr by telling them they'll be saving money each month.

I took out the longest loan so the monthly payments would be low. This way I am required to pay as little as possible but I can still pay as much monthly as I want. If for some reason I have money struggles it will be easier to pay the lower monthly amount. At the current payments my loan will be paid off well before 30 years.

My house is worth $1,000,000... I owe $510,000

My rate is 4.125. My payment is a little over $3250/mo.

I could pay it off today if I wanted to, yet my $500k sitting in investments is making me significantly more in interest, than I am losing. Plus I have a lot more freedom for other investments or opportunities that come up.


So why would I pay it off except for peace of mind?If your break even is under 18 months its usually a no brainer.

I went from 6.25 to 4.125 and saved $800/mo off my payment. It was a no brainer.

LOL at poorcels

The idea is to NEVER pay it back

simple eg:

you mortgage a house worth 500K in 2015, 30 yrd mortgage


in 2022 the house is wortth 700K, so you sell it, make 200K profit (out of thin air) and mortgage another house..Rinse and repeat

eg #2:
same house mortgaged in 2015 for 500K , in 2020 instead u move out and rent it, the poorcels renting will be paying your mortgage for the next 20 yrs....



^^ that’s how you leverage your money to make more money.

The house you buy is gaining value too. That doesn’t always work, especially in desired locations, good school districts etc houses available / selling for top dollar. It ends up being like leasing a car. You are gaining “equity” in terms of amount paid, but the amount owed is ever increasing as well. You pay significantly more interest the first 10 years of a mtg per month than you do further along. Doing that makes the banks happy I’m sure.

Depending on your location, where I live prices have been going up steadily. There is no reason to buy a chit house that doesn’t go up in value

Also, you can rent it after first year.


The alternative is renting, tried that. No thx jeff, made chit ton of money from buying good houses in the last 10 yrs

Unfortunately for people who are actually financially responsible, there exists something called the Fed. Our system preys on both sides: the fuking idiot who borrows everything they can and the responsible saver. They prey on the idiot by taking money away in the form of interest, and by jacking up the prices of assets using credit. The responsible saver believes that "his day will come", and that prices will fall one day. Well the Fed has proven that when the chit hits the fan, they just print money, diluting the money supply, and making the responsible saver's money worth a lot less.

The system is set up to screw everyone.

If you can't beat em, join em. I hope you boyos are locked and loaded with investments.

With low rates it may be a better idea to do 30 years. Remember cash now is worth more than cash 30 years from now.
Also debt is THE best hedge against inflation that will probably happen since were printing cash like crazy

Most people can't afford to pay a house off in 15 years. Or even if you can if you get a 30 you can pay it off quicker if you wish. But if you fall on hard times, you can drop back down to the minimum payment.

I did pretty well in 2020. Made enough money trading in the market to pay my house off cash tomorrow if I wanted to. Instead I refinanced at a 2.8% interest rate and pay $585 per month for my mortgage (resigned for 30 years). Rent for this same house is about $1500 per month in our current market.


So overall I'm paying just a bit more then a third of what it would cost me to rent this place.



First couple of years in this house it felt daunting knowing that I would be paying on it for 30 years. And at the time the mortgage, plus house-hold utilities/bills were about 40% of my income. After increasing my income and putting some equity into the home (About 70K). It feels like I'm over the hump and on cruise control. Plan is eventually move in with my girlfriend. I'll keep this place and rent it out. $585 covering my mortgage and I'll pocket over $900 cash. All while some pleb pays down the rest of my mortgage and pays for an asset that I'll own.



As opposed to what? Paying close to the same amount of money in rent for 30+ years and getting nothing when their done except more rent payments?


My sister has been renting for 22 years now. Currently the average for her monthly rent over the course of that 22 years is $1400 per month. $369,600 in rent over that time period. In the wind. If she'd have bought a house at least she'd have 369k in equity.

I'm sorry but there is a massive correlation between wealth and owning real estate. Even if its a single family home.

No reason not to stretch it out as long as possible in a low-rate environment, low rate + long term + early payment flexibility are the way to go

Chit is borderline free money right now, I'm about to lock in 1.44% or maybe as low as 1.34% on a $365k mortgage

I was just thinking about this the other day in terms of “diversification” upgrading my house just as an inflationary hedge, stock market should be fine too though. I can’t bring myself to justify the property taxes I’d pay in an upgrade, which would likely be around $12k/year or more vs current $6k/year for smaller house. More house & yard would be enjoyed though.

i got a 30 year mortgage just in case i lost my job or something but still paid it off in 6 years

i paid a little more in interest, but it was an insurance policy

This. Super low loan, so I’d rather pay it over a long period of time. Opportunity cost of long mortgage + investing > short mortgage + less investedWtf do you do, and how much $$??

This.

Poorcels wouldn’t know how to invest or what an opportunity cost is so they’ll think oh em gee it’s debt lets just pay it off, the with the salary we can just spend it all or just save

Exactly. I just refinanced. Lower payment and took out 30k for impact windows and roof Imagine how much a 3 bedroom, 2 bathroom w garage 2000 square feet would be to rent in S Florida in 20 years.... I will be paying $990 a month with taxes and everything - the Mortgage. In 2040 that will sound ridiculously cheap... I don't see myself moving in 10/15 years. Love my city/friends.

no they cant, called mortgage break fee. you know how dumb that would be for the bank if plebs can just get out of a mortgage like that?

Why waste all this capital when u can use it to buy stocks, more houses and make it grow?? it’s actually less risky this way if you know how to invest, you’ll end with a lot more money both in the short and long term.

It’s a no brainer for me, but it takes some education and experience to know how to game the system. If you know how to play your cards well, it’s excellent, otherwise yes use all the money u have to buy a house, furniture, renos etc. Chances u wont have any money lift to take any risk anyway

This. Pay extra towards principal every month

30 year mortgage brah checking in. Actually since I refinanced this past summer two years into my original mortgage, I'm really in a 32 year mortgage. Financially illiterate people don't understand that with a super low rate loan, the smartest idea is to pay it off in the longest time possible. My mortgage payment is gonna look dirt cheap in 20 years and I'm gonna have a ton of money in the stock market.

House I paid off, should I get a home equity up to 80% Ltv and invest it?
I can pull out 400k+

Bit late to the party but I’ve been looking at mortgages and am planning on buying in 2021. If I take a 15 year mortgage I’d be paying the same I’m paying to rent my place I’m at now but if I take a 30 year mortgage it’s less than half of what I pay and then I’m free to pay more if need be. If any emergencies come up I’ve got a lot of leeway with things. Having a mortgage not only makes my monthly bills lower but I’d also have a house at the end of it!