15 vs. 30 Year Loan

[Izac Sheforgen]

Looking for any recommendations on mortgages. I currently own a single family home and have an FHA 3.6% interest rate 30 year loan in which I pay $1,559 per month, which includes PMI. I currently rent out the extra rooms and pay most of my mortgage. I'm looking to purchase a duplex in the Spring, which I'm hoping to owner occupy. My question is, should I refinance my current mortgage to a conventional 15 year or 30 year loan? The interest rate for the 15 year is 2.625 % and 30 year is 2.9%. My payment for the 15 year loan would be $1,944 and the 30 year would be $1,440, which both include PMI. I know I can do a 30 year and pay extra, but I would still pay much more in interest over the full loan term.

I'm wondering what people suggest in this situation. Do I pay down my home faster with a 15-year or save the money for my next investment property? Should I am to get rid of PMI as fast as possible or save the money for the next property?

Thanks in advanced for replies!

[Michael Heisterkamp]

What stage are you at in your life?  The reason I ask this is becuase this will dictate the strategy you should use.  If you are early on in your investing career and life I say go with the 30 year mortgage to accelerate your acquisition timeline.  If you are more advanced in your career and life the 15 year mortgage may be a better bet to get out from under the debt quicker and have free and clear cashflow for retirement.  But as always go with the financing strategy that is best suited to the properties ability to be profitable.  For example it doesn't make much sense to do a 15 year mortagage if you can only get 1600 renting out the entire home.   

If you want to chat more feel free to reach out!

[Caleb Brown]

Michael nailed it. If your goal is cash flow and growing your portfolio then 30 year. if your goal is no debt 15 year loan

[Izac Sheforgen]

Thanks for the replies Caleb and Michael! I can get about $2,000 for rent on this property. Going with the 15 year would definitely limit my cash flow, so I think I’ll most likely do the 30 year option