I have recently refinanced my home from a 15-year fixed mortgage with a 2.75% interest into a 30-year fixed mortgage at 3.375% interest. This may sound crazy, but because I will be disciplined in investing the difference in monthly payments, I will come out on top after the end of the mortgage, 30 years from now, assuming that the market returns 7% on average yearly.
Using the calculator over at financialmentor.com for their compounding interest and getting a spreadsheet for amortization of a loan, I can compare the two loans and see how much money I would make after 30 years for both scenario. This idea was influenced by Graham Stephan’s video on 15 vs 30 year fixed mortgage.
Aside from lowering my monthly payment, I am also able to fully utilize the equity of my home. I will not only stop at getting a refinance, but I will continue to get a HELOC when all is said and done. After my post about starting with Real Estate for rental property, I have realized that this will be my best course of action. I have tried to get a cash out refinance, but the numbers didn’t seem to line up on my mortgage comparison. HELOC will be just as good of a tool to use when I’m ready to make that real estate rental property leap.
I will keep you guys up to date after my HELOC finishes.
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