Why Y-Gens Need to Know What a 15 Year Mortgage is...

by - 8:45 PM

So, why I am here. Because I am a financial nazi. I remember when kids would sit in math class and say, "Why do I need to learn this? I will never use this." hahahahhahaha. Dumb.

I feel like we live in a society that cares more about affording payments than the actual price of something. For instance a laptop isn't advertised as $2,000.00 it is advertised as" 80 easy payments of $45.00 a month. " Which really means you are paying $3,600. Simple enough and pretty obvious. However, I notice less people care how much they pay on interest for a home. Which...is ODD.

Now, I'm not saying 30 year mortgages are bad. I am saying you should never pay the minimum payment for anything. If you have a credit card or even a car payment it is HIGHLY recommended you never pay the minimum on things like this. 30 year mortgages are NOT bad, but they can/should be treated with a 15 to 10 year mentality if you plan to save $$$$$. Doooooessss that make sense? So, even if you don't have a 15 year mortgage or cannot qualify for one...that doesn't mean you can't treat your mortgage as if it is one.

Now, if you solely want a home to have a home and don't mind the dollars and cents. Then it really doesn't matter. Keep in mind, interest is a very important factor in our overall economy. Someones gain will always be a loss. But, If your goal is to save, then listen up!

Why Y-Gens Need to Know What a 15 Year Mortgage is...

1. We were college kids during a financial collapse, which means as bill paying adults we have historically low interest rates. 
In the 80's interest rates were as high as 18.5%! Wow, good for investors and people with big money on hand. Right Y-gens have the opportunity to gain in by...borrowing. Right now a 15 year mortgage is at 3.15%. This is a gain for borrowers. 

2. Just because you can "afford" a more expensive home, doesn't mean you should mortgage one. 
Buy BELOW YOUR MEANS! Don't go broke trying to "look rich." I likely could have saved and mortgaged a home for TWICE the price of the home I ended up with. But, buying a cheaper home and having the ability to make additional/double payments means more bang for your buck.

3. You can still treat your 30 year mortgage like a 15 year mortgage.
What is really nice is if you discipline yourself to make extra payments on your mortgage, if you come into a rut...then you can pay your minimum. Your situation can get better for good or bad.

5. You can potentially pay twice the price of your home over time.
Who remembers the rule of 72? 

6. You build equity faster.
Especially important if this is your first home. The more equity you build the more you can put down for your next home purchase in the future. 

7. Even though it requires more cash per month, it means more cash is saved and gone to the principle of your loan over time. 
 This generation needs to get out of the, "buy now worry later" mentality. Short term pain for a long term gain. You could potentially purchase an amazing home in the future and pay less than half the price for it. 

8. Its up to you.

Right now Y gens have the opportunity to borrow for less risk. Go for it, because the opportunity might not be their for long. 

I am sure there are a plethora of things I have left out! By all means share! 

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