We are buying a new(er) house soon.

Would you max the mortage payments out at 15 years or strectch it out to 20 or 30in this economy?

IF I paid it in 15 years it would cost me $50K in interest, 20 years is $80 K, 30 years is $110K in interest. The 15 year would be TIGHT and with being a bigger house I am thinking the 20 year would be the best option and pay ahead if I can.

Given that scenario, I would do 20 years. If 15 is TIGHT I would assume 20 would not be as tight, but doable, so I would do 20.

I guess, I would also want to know if you are a mom or looking at having kids soon. Would you want to be a SAHM therefore changing your income? When my dh and I bought this house it was way comfortable for us, but we were 2 income then. We knew that if/when we had kids I would stay home then. Now with the 30 yr. mortgage we have we have a little bit of breathing room even on one income and look forward to when we can pay extra (when we are done remodeling/updating the house).

KWIM?

We originally did a 15 that was tight and when our taxes took a jump it got way too tight. Two years ago we refinanced at 25 years and it has been great. We have been making extra principal payment (most companies will let you do this free of charge with your payment - we use GMAC). We have no prepayment penalty. Interest rates have dropped so much now we are going to do another refi and do a 15. It knocks 8 years off, 35K interest and our payments will actually stay the same because we have been paying extra. So I guess my advice is don't go too tight, you don't know what will happen and you don't want to hurt yourselves.

I'd go with the 30 and simply pay extra on my principal when I had the money and, if I didn't have the money, pay the normal amount. You can create your own 15/20/25 year loan that way, but you don't get "stuck" if something happens w/ the job.

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I agree with what Calimari said. That is exactly what I do and it works out great, plus if I don't have extra, then I only have to pay the smaller amount.

I'm a SAHM to 3 (9,7, and 5) going to look for a part time job once youngest is in PS but it would be very part time to work around school hours so I dont want to even count it in this ecom.

I hadn't thought about paying a head of time and taxes going up. Thanks! I just saw how much it is going to take to pay in interest in all the loans and I am not wanting to give it to the bank. KWIM

I also wanted to ask if paying for points is a good idea? We are planning on being in the new house until the retirement home or worse.

I do what Calimari recommends - stretch out the loan term then pay ahead. Right now we're on a 15 year term because the loan amount is so low and that was the loan with the best interest rate. We're on a 7 year pay-off plan, though. We simply send extra principal with each payment.

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If you have any doubts whatsoever about affording the payments of a 15 or 20 year loan, then go for the 30 year - don't set yourself up to miss a payment!

Then, go on a payment plan:
1) Pay half of your mortgage every two weeks to save years and thousands.

2) Divide your mortgage by 12 and pay that amount extra every month to add 1 extra payment a year to save about 7 years.

3) Add $100 every month and specify that it is for principal - that means $1200 a year totally prinicipal whereas your normal payment will include very minimal principal the next few years.

With any of these options, you will save tens of thousands of dollars in the long run and pay off your mortgage before 30 years, but you are not locked into the higher payments (like for a shorter term loan), so if you hit financial hardship at any time, you can temporarily backdown your extra payments and still afford your actual mortgage.

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