keflex resistance

15 Year Mortgage

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Warning: This advice may be shocking.

“If you cant afford to pay it off in 15 years then you cant afford it.”  Advice given to me by one of my advisors.  Before I bought my first property I talked to lots of people about my options.  This included many close friends and relatives.  One of them had great advice.  That advice was, if you cant afford to pay it off in 15 years you cant afford it.

This simple piece of advice will save you thousands of dollars, it will save you hundreds of thousands of dollars in interest payments.

I know the lure of buying a “bigger better” home might be there.  We all want to live in the best home we can afford.  So just to drive this idea home here is an example.

Home Buyer Number 1
Buys a home for $200,000 and finances it at 5% for 30 years
Home buyer number 1 would pay $1073.64 a month for a total of $386511.57 and a total interest of $186,511.57

Home Buyer Number 2
Buys a home for $200,000 and finances it at 5% for 15 years.
Home buyer number 2 would pay $1581.59 a month for a total of 284685.71 and a total interest of $84,685.71

Total Money Saved $101,825.86

I know that you are able to qualify for a more expensive home if you go for the 30 year mortgage but you will get rich faster if you go for the 15 year.  I base my theory on the total real money saved $101,825.86.  That is a TON of money to save just to raise your payment by $500 a month.  Once you get use to the higher payment you wont even notice you are paying more than some of your poor neighbors.  Do you want to be the rich guy next door?  Then only finance your home for 15 years!

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