15-year fixed vs 30 year fixed for $80,000 mortgage.

NeedaCobra

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Well,

I'm considering on buying my first house.

I would be getting a mortgage for about $80,000.

Now, I would still be in school in and out for a while, so I was thinking a 30-year fixed would be better and give me more leeway.

Now, $80,000 isn't that big of a number, but around here there are some townhouses about the same price for a 3 bedroom, 2 bathroom townhouse.

With a 30 year fixed the payment would be perhaps around $570ish plus $200 for utilities (power, water, trash and lawn care).

So just curious if a 30-year fixed would be fine, and I could pay extra on the months ahead.

I'll be 100% debt free pretty soon, so I have no other debts to pay.

I'm 23, BTW.
 

04SLOBRA1

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damn bro only 80,000 thats about a third of what you would pay here for that, where do you live cause thats where I want to be.
 

04SLOBRA1

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if you dont plan on staying there for ever then look around at some other mortgage options, you could end up pissing money away for no reason.
 

Juruense

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What really matters and what you do not say is how long you plan to own the house. If you are going to buy it with the goal of owning it until it is paid for 15 years is the way to go. If you are going to only stay in the house 5 years or so then 30 years is the way to go.

You can pay extra on the principal each month unless the contract states otherwise. Paying extra is usually allowed, but review the contract to be sure.
 

ON D BIT

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a well known financial counsoler states the 15 year fixed is the only way to go. with no more than 25% of your take home pay going to your mortgage. this is the way i would go if you want to be totally debt free!

if this works in your budget go with the 15 year. if your income is not that high go with the 30 year.
 

kschaper

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Take a 30 yr. Figure what the payment for a 15 year is and make it when you can. That way you aren't required if something happens like you need a new water heater or whatever. Some states have pre-pays some don't. If you aren't staying long don't take one. The difference in and ARM and fixed is not as big so you won't get a much better deal.
 

NeedaCobra

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Thanks for the info.

I would be interested in buying it 100%, and then renting it out to someone after a while.
 

Stanley

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I don't know what you make, but like has been said already, if you can afford the 15yr go with it. If you can't go with the 30. You can always refinance it later when the interest rate goes down when you make more money.

Be sure you factor in taxes and insurance to what your actual payment will be. When the wife and I were looking for a house I went with what ever the amount financed that was going to be the payment. If it is $80,000 then the payment would be $800 with taxes and insurance. That was usually pretty close for us here in Texas, but we pay a pretty high property tax.

Good luck, owning your own home rules.
 

Sinister04L

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Stanley said:
I don't know what you make, but like has been said already, if you can afford the 15yr go with it. If you can't go with the 30. You can always refinance it later when the interest rate goes down when you make more money.

Be sure you factor in taxes and insurance to what your actual payment will be. When the wife and I were looking for a house I went with what ever the amount financed that was going to be the payment. If it is $80,000 then the payment would be $800 with taxes and insurance. That was usually pretty close for us here in Texas, but we pay a pretty high property tax.

Good luck, owning your own home rules.

That's what I was going to say. That $570 note becomes $900 with property tax and insurance (depending where you live).
 

Allanon

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I built my house about 8 years ago, and I sure wish I had done the 15 year. I would be halfway done, but as is I am not even close:nonono:
 

dtheo

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ON D BIT said:
a well known financial counsoler states the 15 year fixed is the only way to go. with no more than 25% of your take home pay going to your mortgage. this is the way i would go if you want to be totally debt free!

if this works in your budget go with the 15 year. if your income is not that high go with the 30 year.


Being that this kid is still in college and probably has some good amount of debt, a 15 year note has a much higher payment where as if you got a 30 year note and made the same payments as a 15 year payment, he could have the flexibility of paying it off in 15 years or 30 years. The point is, being he is a young guy, pulling the trigger on a 15year mortgage could backfire if money gets tight. I'd say be safe and get the lower payment 30 year. He won't be in this house more than 6 years if that.
 

Black1999Cobra

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1 thing to keep in mind, tell your mortage company that you want 1/2 of the payment taken out on the 15th and the other half taken out on the 30th. This will save big $$ in the long run...and doesnt cost you 1 extra cent (besides paying half of the monthly payment 2 weeks early). I would definitely do this and like others have said, go with the 30 year especially if this is your first house. Some things mentioned like property taxes, house insurance, etc. get tacked on to that payment. We moved into our first house, and we need roto-rooter right away. The house had sat for about 2-3 months. That was $120 right away.

Like others have said, you can always pay more on a longer loan (exactly what I am doing) rather than having to pay a higher amount. With a shorter loan you get a slightly better interest rate, but it isnt worth it if you cant make the payment and lose the house.
 
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CyberDaveA

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I live in a 3/2 house in Orlando and my utility bills average:

$130 - Cable TV/Broadband Combo
$200 - Electric
$40 - Water/Sewer
$370 Total

My mom has a townhouse locally, and she has to pay a lot for insurance and for the HOA fees.

Just make sure your not low-balling your expected payment, before you make your decision.
 

ON D BIT

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dtheo said:
Being that this kid is still in college and probably has some good amount of debt, a 15 year note has a much higher payment where as if you got a 30 year note and made the same payments as a 15 year payment, he could have the flexibility of paying it off in 15 years or 30 years.

i guess you did not see that 25% of the take home pay.

using his example 30 year 80k mortgage at 6% ~ 470 + 100 for insurance and taxes ~ 570. its not exact but lets go with it. so about 600 bucks for the home. if he brings home 2400 a month(38k yearly salary) it would equal 25% of his take home pay. 1800 a month for living savings and giving.
total interest would be over 92k over the course of the 30 years.

a 15 year 80k loan at 6% ~ 675 + 100 for insurance and taxes ~ 775 or about $800. if he brings 3200 a month(51k yearly salary) it would equall 25% of his take home pay. and give him 2400 every month to live save and give.
total interest would be under 42k over the course of the 15 years.
 

BLK03SVT10TH

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I would do the 30 Year Fixed, if you've got the extra cash you can always make extra payments, but you never know what is going to happen in life, if you've got the larger payment at the 15 Year Fixed and money gets tight, the bank isn't going to wait to get paid and it will screw your credit if your late.

I bought my first house about 7 years ago and initially I went with a 15 Year Fixed Loan. My payment was 2800.00 a Month not including an additional 300.00 for Property Taxes. Then with all the other bills, Gas & Electric, Phone, Cable, Internet, Water, Trash, Insurance, Car Payment, Car Insurance, I was looking at another 1500.00 a Month not including Spending Money and Food. I made it 2 years before I decided to re-finance because the stress of coming up with that much cash every month was crazy. I was trying to re-model my entire house inside and out and I decided I could use the extra money every month. I re-financed to a 30 Year Fixed and never looked back, lowered my monthly expenses by about 1000.00 a Month.

The one benefit to doing the 15 Year Fixed for the first couple years is it really put a nice dent in the principal and the Tax Write-Off on the Interest really helped me out Income Tax wise.
 

vipergts281

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kschaper said:
Take a 30 yr. Figure what the payment for a 15 year is and make it when you can. That way you aren't required if something happens like you need a new water heater or whatever. Some states have pre-pays some don't. If you aren't staying long don't take one. The difference in and ARM and fixed is not as big so you won't get a much better deal.
Best advice in this thread.

Take the 30 year. And like he said, pay the 15 year payment if you want to some months.

Or, if you know you can definitely afford the 15 year, then take it. It's only about $185 more a month but it obviously cuts 15 years off.
 

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