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Updated over 7 years ago on . Most recent reply

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14
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2
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Brett M.
  • Tacoma, WA
2
Votes |
14
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15 yr vs 30 yr with extra principal payments

Brett M.
  • Tacoma, WA
Posted

Is there ever a instance where it is actually a better deal to do a 30 year and make extra principal payments instead of just a 15 year? 

Besides the flexibility of having the extra money

Most Popular Reply

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69
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54
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Kristina Sparrow
  • Investor
  • Denver, CO
54
Votes |
69
Posts
Kristina Sparrow
  • Investor
  • Denver, CO
Replied

If you just plan to make the extra principal payments on the 30yr, then yes the only benefit over a 15yr would be flexibility. But that flexibility comes with the cost of a higher interest rate and more total interest paid over the 15 year period. However, instead of making the extra payments on a 30yr, another option is to make regular payments but invest the difference between what you would pay on a 15yr. This would be the most beneficial scenario given you can find investments with an expected return greater than the interest rate on the mortgage.

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