03-18-2011, 12:26 AM
pinion wrote:
Googling around for some supportive math I found this:
http://www.daveramsey.com/article/why-da..._mortgage/
The biggest thing I take away from that article is the part that talks about how much it costs just in interest to the bank for the first ten years.you've paid almost $162,000, but you've only knocked $36,000 off the loan. So over the past 10 years, you've given the bank $130,000!So kiss your tax saving goodbye because you're paying more to the bank than you are saving in taxes. All a 30 year loan is doing is helping you buy more of a house that you can't afford to begin with so that the bank can collect extra money from you in interest. It would be better to determine how much you can afford per month and figure up how much house you can buy with a 15 year mortgage based on that. 4.875% is pretty good but current 15 year rates are 3.625% according to Google.
30 years is the norm because that's what the banks like because then they can line their pockets with more of our money. And we like it because we "deserve" to have the big house.
Agree with your assessment. Our first house we got the 30 year mortgage because we did not thoroughly understand the 30 year one versus the shorter one. Close friends and relatives, who have been home owners for a longer time, recommended for the 30. Our second home, we weren't sure how stable our employments were. As it turned out, our employments are lasting ... for a longer time.