Planning to buy a house in Fremont/Milpitas area, CA

I would probably recommend the 15 year mortgage plan. Reason being that you would account for paying higher monthly payments, and will have your home paid off sooner. That means that you will pay less interest.

Also, make sure you have an emergency fund set up to make mortgage payments in case you're out of a job or want to take a break.

Sorry, but I do not have any mortgage lenders or real estate agents to recommend.

Quote from greensam88 : I would probably recommend the 15 year mortgage plan. Reason being that you would account for paying higher monthly payments, and will have your home paid off sooner. That means that you will pay less interest. Also, make sure you have an emergency fund set up to make mortgage payments in case you're out of a job or want to take a break. Sorry, but I do not have any mortgage lenders or real estate agents to recommend.

Sure you will pay less interest but there is a cost in doing so as the OP already indicated. If one of them wants to take a break from work then it would be difficult to do so. Money is dirt cheap...at some point rates will increase again and we will start seeing T-Bills in the 3% range. In which case his borrowed money is essentially free.

Quote from PiratesSayARRR : Sure you will pay less interest but there is a cost in doing so as the OP already indicated. If one of them wants to take a break from work then it would be difficult to do so. Money is dirt cheap...at some point rates will increase again and we will start seeing T-Bills in the 3% range. In which case his borrowed money is essentially free.

Makes sense. But the 3% is on $750K (lets say). It is a lot of interest .. don't you think?

Quote from spdhanraj : Makes sense. But the 3% is on $750K (lets say). It is a lot of interest .. don't you think?

Sure but it gives you the option. Double check to see if there is a prepayment penalty. Likely you will be able to pay make more that just your mortgage payment, then if you need to you have the option to scale back.

Quote from PiratesSayARRR : Sure but it gives you the option. Double check to see if there is a prepayment penalty. Likely you will be able to pay make more that just your mortgage payment, then if you need to you have the option to scale back.

Good point.Will check that.

Thx!

There are quite a few important factors to consider in addition to the interest (which is tax deductible).

You mention a 750k loan which would put you into Jumbo products, where the pricing changes from conventional High Balance (which is up to $625,500 in your County). Plus 80% LTV is available but better rates are at 75% for Jumbo as well.

Most financial planners would suggest a 30 Fixed for someone your age too; where the lower payment leaves you flexibility and more room to build other equity that would hopefully yield more than 4.00% on average over time. Not sure what your debt to income ratios would be with a 15 year payment buy you want to enjoy your home while not be married to a high mortgage payment.

I am seeing many refinances into 30 Fixed from 15 (because the money is so cheap) for this very reason; and the perspective our parents had (payoff the house asap) with much higher interest rates than today does not necessarily apply the same way today. Again, lots of factors and every persons scenario is different.

-Adam
Old Hippy & Mortgage Pro

Do 30 years get that tax wright off..You can always pay that other 1200 a month direct to Principal if you really want.Or save it up and buy a rental property.