15 year or 30 year mortgage?

[Cristina S.]

We're looking to purchase our first rental (investor couple mid 40's, early 50's respectively). 

We plan on borrowing about 60,000-70,000. 

Is it better to do a 30 year mortgage with approx. 200+ cash-flow margin or a 15 year mortgage with 100 a month cashflow margin?

We are looking to keep this property (and hopefully a few more in the future) as part of our retirement income.

Thank you so much for any views.

[Andrew Postell]

@Cristina S. lots of different opinions on this subject so I will try to tackle a few that go in line with the practical differences between the two.  The 15 year loan will have less interest paid towards it over the life of the loan but the 30 year loan has some pretty distinct advantages.  Not only does the 30 year loan allow you to cash flow more but it will also allow you to qualify easier for the next loan.  When you qualify for your next loan they hold your present debts against you.  Every little bit helps.  The 30 year loan also offers flexibility.  Chances are that the 30 year loan will not have a prepayment penalty.  So if you wanted to pay a 15 year payment you could.  AND if things got really hairy in the world...you could go back to the 30 year note payment.  If you were on the 15 year payment...you will always have to pay that payment no matter what.  So qualifying easier and flexibility are in favor of the 30 year loan.

Everybody's financial situation is different but if you are just starting out I think I would lean on the 30 year loan for those reasons.