Switch from 15 to 30 Yr. Mortgage?

 My wife told me of two radio programs she heard which discussed how
closely the rates are tracking between 15 year and 30 year mortgage
loans, and how it's worth changing to the longer term loan in order to
free up money that could be otherwise invested.

We now have a 15 year at 4.875 percent. The lowest 30 year rate I can
find for our state (Massachusetts) is 5.5 percent.

I'm interested in opinions, references to relevant articles, etc.
concerning this. I don't know a lot about these matters, but it seems
to me a 15 year loan saves in interest payments. But perhaps that's not
the most important issue.

Thanks.

  "My wife told me of two radio programs she heard which discussed how
closely the rates are tracking between 15 year and 30 year mortgage
loans, and how it's worth changing to the longer term loan in order to
free up money that could be otherwise invested.

We now have a 15 year at 4.875 percent. The lowest 30 year rate I can
find for our state (Massachusetts) is 5.5 percent.

I'm interested in opinions, references to relevant articles, etc.
concerning this. I don't know a lot about these matters, but it seems
to me a 15 year loan saves in interest payments. But perhaps that's not

the most important issue. "


What exactly do you want to know?  It sounds like you've figured out
the basics already.  The rate on a 30 yr is slightly higher, but the
monthly payment is less.     A web search can find you plenty of
calculators that will tell you what the monthly payments would be for
each loan.  The tradeoff is that while the 30 yr loan will free up a
modest amount of cash each month, you will wind up taking 15 more years
to pay it off and pay a hell of a lot more in interest.  The question
is, how bad do you need the extra cash each month and what are you
going to do with it?   If you need it and are going to use it for
medical expenses or investment, it can make excellent sense.  But if
you don't need it or have specific purpose, it usually gets spent on
vacations, dining out, and more beer,  and then it looks real bad.

 ksternberg1@yahoo.com wrote:

I dont see how this will work out for you unless you are some kind of
awesome investor.  As it stands, in 15 years you wont have any mortgage
and you can then invest the full value of principle and interest
payments into something for the subsequent 15 years.

I wouldnt expect much of a decrease in payment with the 30 year
mortgate.  There is no way I would do it.  And those mortgage agents are
perpetual deceivers.  My last one was actually a good guy, but he also
slipped in a bit of deception/mistake.



--
Respectfully,


CL Gilbert

 " dont see how this will work out for you unless you are some kind of
awesome investor. "

He doesn't have to be an awesome investor for it to work, just an
average one.  Mortgage rates are around 5%.  Being deductible, that
gets reduced by whatever tax bracket he's in, reducing by 15-36%, so
the real cost of money is more like 4%.  The stock market has
historically returned around 8-10% over long periods like the 30 years
he's looking at.  Or he could put it into a rental property, which will
appreciate over time and generate income.  It's not hard for this to
make economic sense, you just have to use it for a reasonable
investment and not spend it on entertainment instead.

 trader4@optonline.net wrote:

Yes but shouldnt we only consider the difference between the 30year rate
and the 15 year rate? As opposed to the whole say 5%?

--
Respectfully,


CL Gilbert