Just Say NO to 30-Year Mortgages!
The 30-year mortgage should’ve gone out of style 30 years ago.
I know this is a very controversial opinion, but these are the topics I promised you we would talk about. You’re probably thinking, why would she want people to have higher mortgage payments? I wouldn’t. With almost 20 years in the lending industry the one thing I’ve learned about the American people is that we’ve lost sight of the American Dream. A dream built on home ownership, not on home mortgageship. The operative word is OWNERSHIP.
Let us examine this closely. Most adults cannot afford to buy that first home until they are in their thirties and more and more that is becoming the early forties. It usually takes 30 years to pay off a home. This could mean you could be in your sixties, or even seventies by the time you are free of mortgage debt. What would life look like if the standard mortgage was only 15 years? Now, that same 30-year-old, first-time homebuyer owns his or her home by the time he or she reaches 45. Imagine at age 45 actually OWNING your home. What kind of college education could you provide your children if you didn’t have to worry about mortgage payments? What kind of business could you start if you weren’t working to keep a roof over your head? A lot of things could be different if you owned your home in 15 years. In less than 10 years, you would have an enormous amount of equity (real equity) based on principal reduction not price escalation. [see chart below]
I know you’re thinking, how could anyone afford to buy their home in 15 years, the payments would be twice as high. This is not true; the difference in a 15 and 30-year mortgage is not twice the amount. In addition, most lenders will offer lower rates if you lower your term on your mortgage. Why? Because they will be paid off sooner thus limiting the risk associated with your loan. Check out this comparison table for a standard $100,000 mortgage at 5 percent.
|Amount||Payment||Int. Rate||Total of Payments||Balance in 10yrs|
Alicia Taylor, Sr. Manager Mortgage Solutions LLC
6655 W. Sahara Ave A-212 • Las Vegas, NV 89146
702-241-0206 Direct • 702-368-0059 Office • 702-385-0089 fax