15 year fixed or 30 year fixed?
Hi everyone! I’m trying to figure out the best mortgage strategy for rental properties. Personally, I typically put down 20–30% and go with a 15-year fixed mortgage since it offers lower rates and I can comfortably cover the monthly payments. However, I know that a 30-year fixed often provides better cash flow due to lower payments, even though the rate is higher. I’ve also heard that some investors choose a 30-year fixed and then pay extra each month to reduce the total interest—almost like mimicking a 15-year fixed—but I’m unclear on how that saves on interest given the rate differences.
So, I’m curious: Is the 30-year fixed more common, or would you stick with the 15-year fixed if you can afford it, especially when you’re only buying 1–2 properties a year? I’d appreciate any insights or experiences you have. Thanks in advance!
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- Rock Star Extraordinaire
- Northeast, TN
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I prefer the flexibility of 30 year notes, especially when the interest spread is paltry. Right now the difference between the two is less than 75 basis points, certainly nowhere near enough for me to give up the flexibility of the longer note with lower payments. Besides, you can always (essentially) turn a 30 year note into a 15 year note, but not the other way around.
- JD Martin
- Podcast Guest on Show #243
