#askbp 15-yr vs 30-yr mortgage

[David Zinn]

@Brandon Turner

Hey Brandon!

What's better: a 15-yr mortgage or a 30-yr mortgage?

I can still cash flow just fine with a 15, so I decided to take it (PITI with the 15-yr is $550/month, while it is $350/month for the 30-yr. Market rent is currently $1200/month after reno).

I think I am happy with the decision, but it is staggering how much less comparative cash flow I will have during the first 15 years ($36,000!). On the flip side, it's even more staggering how much more comparative cash flow I will have the following 15 years ($63,000). Not to mention, by taking the lower rate I will pay $38,000 less in interest by taking the 15.

By just looking at the numbers, this seems like a slam dunk, but I know it is not that easy. When I own it free and clear I won't be able to write off the mortgage interest on my taxes. Also, in an inflationary environment (which I think we can bank on long-term), cash is worth far more in the earlier years than in the latter years. 

Thoughts?

[Joe Villeneuve]

30.  In fact I'd take a 60 if they gave it to me.  There are a number of reasons, but keep this in mind.  Whatever one you choose, that locks in your payments.  You can always pay a 30 year mortgage in 15 years, but you can't pay a 15 year mortgage in 30.