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Thinking about a 20 yr mortgage

Did anyone get a 20 yr mortgage instead of 30? It saves a TON of interest and doesnt seem to add much to payment. Any thoughts? Will banks give out 20 yr loans same as 30? I will be a first time homebuyer but I will stay within my budget for sure. i dont want to stress about the house payment.

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Anonymous

Asked by Anonymous at 12:19 PM on May. 7, 2010 in Money & Work

Answers (7)
  • We did a 30-year mortgage, however we pay biweekly, which means you make an extra payment every year. That means we're only going to be paying for 23 years instead of the 30.

    I'm not sure about 20-year mortgages, but if you can afford it, go for it!
    Anonymous

    Answer by Anonymous at 12:27 PM on May. 7, 2010

  • The average person only stays in their house 7 years. So thinking about the loan as the life of it like you're going to live there forever is sometimes counter productive. Unless you think this is going to be where you spend the rest of your days, or you're going to keep it and rent it out later on down the road I would be more concerned about payments and less concerned about the interest. It's tax deductible and like I said unless you're going to be in the house for the life of the loan it doesn't really matter. I don't know if banks give 20 year mortgages I would check with who ever preapproves you. I know it's not a common product that brokers in this area offer. Good luck shopping for a house is so much fun!
    mrsjonzy

    Answer by mrsjonzy at 12:28 PM on May. 7, 2010

  • And yes it does matter. Even if you only stay in it for 7 yrs. When you sit down to closing to sell your house 7 years from now your check (equity) will be bigger and the banks check (to pay off the mortgage) will be smaller. Another thing to consider is closing costs. If closing costs in your area are high you don't want to be moving every 7 years and flushing all that money away on closing costs. We had a 30 year biweekly adjustable, that we converted to a 15 year biweekly fixed rate after 3 years. We paid it off at 20 years. It was a great thing! But the biggest way to save money and build equity is not to move around every 7 years. Just because the average American does it, doesn't mean it is a good idea.
    Anonymous

    Answer by Anonymous at 1:53 PM on May. 7, 2010

  • hmm that would be a goof question for a lawyer in the real estate field.
    IraqiVetWife

    Answer by IraqiVetWife at 3:12 PM on May. 7, 2010

  • when you buy your house you get letters asking if you want to reduce your mortgage by doing the extra payment thing. we got lotrs of them but i figured like another lady above who said if you move way pay more. the other lady had a point but with our mortgage compnay we get back what we put into equity at the end of the yr so her advise on having more equity later to put down doesn't work for us. we settled for our house cause we couldn't qauilfy to get a home more suitable for us. so we don't care about paying it off sooner cause when the market comes back up we want to try to get a new house with the sell of ours and hopefully have a better standing. i would your lender his advice and questions and ask if this would benefit your needs according to what you intend on doing with the house later, such as keep it or move up, or to another state.
    melody77

    Answer by melody77 at 3:18 PM on May. 7, 2010

  • I would suggest doing a 30 year mortgage. You can always pay more on your principle which will have the same effect as having a 20 year mortgage. If something would happen that you would be unable to pay the payment on a 20 year loan you don't have to worry because your payment is based on a 30 and you can always make the min. Much easier to pay more than to try and pay less.
    Anonymous

    Answer by Anonymous at 9:14 PM on May. 7, 2010

  • The FDIC says that 97.3% of people don't systematically pay extra on their mortgage. Just food for thought- SMART people realize that having to pay a certain amount is better than saying you'll pay a certain amount.
    You're right- it is a lot cheaper to get a 20 year mortgage. It saves you a lot of interest and it only raises your payments by a little. 20 year mortgages aren't very common though. You can get one, but usually it's a 30 year mortgage or a 15.
    Anonymous

    Answer by Anonymous at 12:45 AM on May. 8, 2010

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