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URL:  http://boards.fool.com/thanks-for-all-the-advice-everyone-im-quite-30386534.aspx

Subject:  Re: Refi: 15-yr or 30-yr FRM? Date:  11/17/2012  12:49 AM
Author:  efchan Number:  124428 of 127236

Thanks for all the advice everyone. I'm quite surprised that everyone suggests more current flexibility. If you pay off the loan sooner, then doesn't that also give you more flexibility, but later down the line? Hmmm..

I can see that making less payments now might make sense esp if invested in good options that return more than the real estate, and more than the interest rate. Even if in 5-6% income funds or something like that. Savings accounts are not giving any returns, so I'm not too sure about that.

The other part of it is that the 3% of interest is paid on a relatively large sum, whereas the monthly $ that I could save with a longer maturity option (say 30-year at 4%), even if I collect more interest or return on it, it will take a really long time, if ever, to catch up with the extra interest that is charged. For example, in the first year, say with a $200,000 loan, 4% ~ $8000. 3% ~ $6000, so you have an extra ~$2000 in interest to make up. Now, you may save say $1500 in monthly payments (just making up that #). You can't really say you are saving it though, because you will have to make more payments later. And, investing that $1500, you would need more than 100% return to earn $2000 back.

Sorry if this seems slightly incoherent.
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