15 vs. 30-Year Mortgages: The Real Cost Difference

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What’s the most brilliant way to pay off your mortgage early? Simple: pay more towards your 30-year mortgage! We know what you’re thinking, “30-year mortgages are the gold standard! I can only cash flow my rental properties with a 30-year mortgage payment!” Listen, we hear you, but that 30-year mortgage could be costing you hundreds of thousands of dollars in interest and essentially eat away at all the cash flow you worked so hard to create. Is it always the wrong choice? NO! But there may be some better ways to pay off your mortgage faster!

Christian and David are back on this Mortgage Monday episode to talk about the massive interest savings you can get from tweaking your loan terms. 15-year fixed mortgages, 20-year fixed mortgages, and 30-year fixed mortgages: which is the best for building wealth? Today, we’re pitting them head-to-head-to-head to see which saves you the most on interest with today’s sky-high mortgage rates. Plus, even if you have a 30-year mortgage, there are still numerous ways to pay off your mortgage faster. We’re sharing all the mortgage “hacks” with you today!

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00:00 Save a TON on Your Mortgage!
01:06 Sponsor: DealMachine!
02:08 Shorter Loans Mean Bigger Payments
03:52 30 vs. 20 vs. 15-Year Mortgage
08:52 The "Hidden Cost" of Interest
10:52 Mortgage "Hacks" to Pay Off Faster
14:16 Pay Off a Low Rate Mortgage?
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Higher rates - more down, less years; Lower rate- less down, more years. Leveraging cheap money is the ideal scenario...

artur
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Me, a Canadian, listening for pure interest in these 30 year mortgages.

evandently
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I was aware of how amortization works. But I'm glad you shared the information because a lot of people are not aware...Good stuff!!!

valariethomas
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Mortgage interest is tax-deductible on a primary residence. It’s also deductible as a business expense on a rental property. How does that factor into the calculations?

hansenmarc
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Absolutely! Thanks for this valuable info! We believe in that! All of this info provided today make a lot of sense financially. You are right David, why try to pay off your mortgage faster when the interest rates are so low since last mortgage renewal. That being said, our mortgage is coming up for renewal within the next year and with much higher interest mortgage rates, we will definitely go with those 2 strategies where we go to bi-weekly payments and add extra money to each payment so we can pay down our mortgage faster on a relatively shorter time. In the end, we are trying to shave off 10-15 years to our 25 year mortgage term. Thanks again for this excellent financial strategy when it comes to paying down your mortgage and save on the amount of interest $ you pay. That interest $ you pay to the bank never comes back

martinbrisebois
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If you didn't pay more of that principal sooner, what would you do with that money? If you would spend it, then obviously you are better off paying the asset off sooner. But if you were investing it elsewhere with a higher rate of return than the mortgage rate, then you are better off not paying that principal down.

poonekar
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Excellent podcast today, agree with everything !

MichaelJordan-sppj
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This doesn't include property taxes and home owners insurance though. So that's a huge difference when you have to factor these things in.

valsomeone
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My thought is to just invest the extra cash I could potentially pay towards the principal. I Dollar cost avg in to index funds and just forget about it.

If I get 10% return I can beat any additional interest I would’ve paid. Granted I understand I’m paying interest on 500k versus getting 10% on whatever o currently have invested but the more I invest the quicker I can turn the tables on that. I’m also investing the extra cash flow I’m getting by taking the lower payment. But hey maybe I’m doing it wrong however that’s my strategy now.

justinparham
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What if mortgage is 17%? how would you buy? awesome video

lubosimaboshe
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Doing this math without taxes and insurance is insane. Also I found that paying bi-weekly saves more also. And u can always put more to the principle with a 30yr.

vincentharris
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What about the "time value" of money that I used to hear about? In other words, money now is worth more than money later. For instance, getting $1000 up front is better than $5/month for 200 months. Thoughts?

gloriadell
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Not taking into account the gained EQUITY and or increased rent over time on a 30 year fixed mortgage, isn’t this show about CASH FLOW lol ALSO the flexibility of being able to make an extra payment to pay it off faster on your OWN pace.

Soldandfundedbyaveteran
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Making the same overall payment amount, just bi weekly rather than monthly. 2 weeks worth of interest per month on half of the payment...adds up over 30 years, costs you nothing extra, saves you money

BrandonLubanski
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Don’t investors write off the interest on their loans?
I keep hearing how you are losing all this money to interest?

Why not write off the annual interest every year?

chadwatczak
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How can you believe that you are capable of calculating the “real “cost difference between longer-term and shorter term mortgages? You don’t know what the inflation rates will be. You don’t know how much money will be printed. You don’t know what the economic situation will be like during that time period.

_Chev_Chelios
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I need a cash out refinance quote when I finish a quit claim deed. I’ll email Christian for some ideas.

Socalarborist
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Are the 5 years and 10 years going to be part 2? Unless you can just type the numbers

JeffMacey
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If someone has multiple rentals, say 10 on 30 year notes, would it be best to push for paying off only one property then using that additional cash flow for paying off the next, one at a time, or would it be best to pay a little extra on all of them? So best to pay an additional 100/property/mo or 1000/mo on a single property?

mikeroberson
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I have a 0.851% rate. Yes Zero point eight, five one. I owe 89k and the house is valued at 370k. My mortgage payment is 317.54. This is my question. I am building an investment property and am about 30k short on finishing. Should i jeopardize my interest to borrow the money to complete the investment property or should in take to 30 from my 401k. The first house rents for 2k per month and the investment property will rent on section 8 for 2850 per month. The total build is costing me 232, 400. The investment property appraisal would be around 400k.

krsant
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