Refinancing your house

[Pinlifter]

You expect to live in the house for 30 years. Assume you can afford the payments on either a 15 year or 30 year mortgage and the rates are as follows:

15 year 5.00%
30 year 5.50%

Please comment on why you made the selection you did. I'd also appreciate any recommendations on banks or mortgage companies.

Pinlifter

[fluxrad]

15 years at 5% will cost you significantly less.

If you plan on keeping the house either way, the answer is obvious.

Loan: $200,000.
Term: 30 years.
Interest: 5.5%
Total interst paid: $208,808.08

Loan: $200,000
Term: 15 years.
Interest: 5.0%
Total interest paid: $84,685.71

[Pinlifter]

[ QUOTE ]
15 years at 5% will cost you significantly less.

If you plan on keeping the house either way, the answer is obvious.

[/ QUOTE ]

Heres my thought on it.

If I make extra principal payments each month so that I pay the 30 year mortgage off in 15 years the extra .5% would cost me about $9K over the 15 years. Now suppose I do this for a number of years and interest rates have increased significantly. I may no longer wish to make the extra principal payments and instead invest that money elsewhere.

Pinlifter