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unified states - 15-year old vs. 30-year old mortgages that have payed off in 15 years.
It was not about opportunistic costs or inflexibility or spending on families. Yes, I believe the response to the issue of whether disbursing a 30-year old loan in 15 years would be the same amount as disbursing a 15-year old loan at the same interest rates is yes, but ONLY if you disburse it on exactly the same timetable as your alleged 15-year old.
Actually, the response is NO for two reasons: the payback plan and the fact that the 30-year-old will always have a higher interest than the 15-year-old. In the way mortgage amortizations are made, interest is initially disbursed, substantially. As for most individuals, the main part of the month' s interest payments is for the first half of the loans lifetime.
It is good for most of us because in fact most mortgage loans only last a few years after which they are refinanced or moved, and for the first few years the vast bulk of house expenses (interest) are fiscally deductable. It' s questionable whether it is smart to perpetuate this for the rest of your lives... but this is the real thing of most mortgage loans.
So unless you get out of your 30 year old on exactly the same payback plan as your 15-year old theoretician, you will get more payback interest. An overall policy that individuals are pursuing is the making of one additional month's worth of payments (or more) per year. In the course of both of these, you have already spent much more interest than you would have on a 15-year period.
And really, if you can afford to essentially down capital in the first year or two of your mortgage, you should probably have borrowed less money to begin with. Theoretically, IF the prices were the same (they aren't) and IF you bought the 30 each months in the EXACTLY way you would have bought a 15 (you won't) you will end up paying the same amount.
It is up to you to determine whether your choice of flexible solutions is more valuable than your ability to cut costs. E.g.: a 3 00k mortgages at 3. 5% has a one month repayment of ~$2150 for a 15 year and ~$1350 for a 30 year, both starting at ~$875/month of the one in interest (gradually falling with time).
I think that most humans are undervalued is the liberty and tranquility of spirit that comes with a house that' s either already or almost already bought... and 15 years is much more palpable than 30, plus much less expensive than anything else. When you can buy a 15-year old home without overburdening your household, it is definitely the better choice for your finances.
Be cautious about advising on the index fund's opportunistic costs. It may be a good thing on balance if you look at the very long term, historical view, but many individuals get less than mean return on their investment when they buy and what the markets do in the near term.
There' no knowing what yields you will get from the exchange, but if you have a 30-year old mortgages, there' a bunch of knowing what you will be owed each and every 30 months for the next 30 years. Various hybrid forms of investment make good business sense for different individuals, and most individuals would be smart to get some commitment to the exchange for their return and cash flow.
If, however, someone's aim is to borrow more cash for their home in order to spend more cash on the exchange for their pension, it would actually be better to gain safety and autonomy 15 years earlier.