Thread: Jumbo 30 yr fix or 15 yr fix?

Originally Posted by zhy99001

Dear all,

We are thinking of getting a home mortgage loan of $450,000. By filling the online forms of lending tree, we got an e-mail reply of three different types of loans. With 30 yr fixed loan, we are looking at a monthly payment of $ 2800. If we choose 15 fixed loan, the monthly payment will goes up to $3800. If we are thinking of selling the house in 4-5 years and we have enough income to pay $3800 per month, which loan should we select?

Thanks,

As long as you have plenty of reserves in case something happens and you are not causing yourself financial stress by making a $3,800 payment then the 15 year loan is the best option. The reason for this is that the interest rates that you can get on a 15 year jumbo are much better than thatfor a 30 year jumbo. Many lenders are giving a nearly 1% better rate. This equates to nearly $4,500 dollars in interest the first year alone. There is a old saying that fits your situation very well "A penny saved is a penny earned." Just make sure that you are not stretching yourself by commiting to the larger payment.

You will probably pay less interest on the 15 year, but you want to be 100% sure that you can comfortably afford the payment. If you have any doubts that the payment could be too much, then I would recommend getting a 30 year (try to get no prepayment penalty) and you are always free to pay it done faster if you have extra funds.

I guess it all depends on you comfort level with your current situation, if you are fairly confident you job and income is stable then it makes sense to go with the 15 year. However, if there is any uncertainty I would the route portland mentions; get the 30 year loan and make payments like a 15 year.

There is absolutely no point in taking a 15yr loan if you plan to sell in 5yrs!
Yes the interest rate may be a little lower but the downside risks likely out way that. (unless your income is $1mil plus per year and concrete)

Take a 30yr , you could make extra payments and pay down principal faster but there is really no point if you plan to sell to quickly - CASH IS KING - keep it in the bank for an emergency.

Additionally with the way many markets are going there is the possibility you may not be able to sell in 5yrs in which case you may end up with a mortgage on another home? can you afford both? and the down payment on the new home if you dont hold that extra money in the bank?

BUT THE BIGGEST WORRY IS THAT YOU WENT TO LENDING TREE!!!!!!!!!!!!!
I literally almost cried when I read that. To be honest you may be lucky to get a loan at all at this point;
Lending tree is notorious for trashing peoples credit - I have seen numerous people who have gone to lending tree and ended up with such a low score after a month they couldnt get financing at all.
WHY? cause they just sell your 'lead' to different mortgage brokers, who then often shop your loan to several other lenders so at which point you could end up with 12 of more inquiries (hopefully they have found a solution to this, but not that i know of).

Secondly: Because they have several people competing for your loan most people who buy your lead will try to bait and switch you to get the deal - promise you a lower rate & fees to get the deal and at closing find an exscuse to 'bang you over the head' (that's actually the inside terminology these people use nice huh).

In future please find a local reputable broker to help you out, you will be much better served.....

From a more conservative side you are better off going with the 30 year fixed. You have the option of making additional payments if your financial status allows. Seeing as how you are not planning on staying in the home for long time you are basically paying principal for the first few years anyhow.