Which has best short-term benefits - 15 or 30 yr mortgage?

http://www.easymortgagecalc.com/ has some good calculators for this.

If you will only be there for five years, then neither one is a good choice for you. You should choose an interest only loan, something like a 10/20, which is interest only for the first ten years (lower payment) and then converts to a regular fixed rate loan for the last twenty years. That way, if you happen to stay, you will still have a regular mortgage.

The first ten years is fixed rate as well; there is no way I would do a ARM right now.

I just got one of these loans after researching this issue for the very same reason that you state (my wife and I plan on being in this house for about five years, but want the "just in case" benefit of a conversion to a regular mortgage if we stay). Our payment with the 10/20 is $300 per month less than that of a 30 yr fixed mortgage (on a 200K mortgage).

I am going with Bank of America, they have this product that has NO closing costs and NO PMI, which saved a bunch up front (like 4K in closing costs) plus saves another 75 bucks a month by not having PMI.

http://nofeemortgageplus.bankofamerica.com/?#/firs...

Good luck to you!

The best answer would seem to have no mortgage at all. But for most, that is not practical.

Your payments will be higher with a 15 year (bad), but your interest cost will be lower (good).

Only you can decide which is better for you.

If you opt for the 30 year and have lower payments, then the cash you don't pay will go toward 1.) savings or, 2) expenses.

If savings then can you get a better return than the higher cost on interest? If expenses, then, well, I think you can weigh that out.

That you will be there only 5 years, I think that should have zero play in your decision. It doesn't really mean anything to the decision you now face.

I would recommend getting a 30-year loan, and adding money to the principal once a year (if you have it).

You cannot take money out of your house (unless you get a home equity loan, which has a much higher rate), but you can add to it.

And, if you are only staying 5 years, you may not get the money back you would like (the value of the house might not go up in 5 years), but you can right off all of that mortgage interest on taxes.

I think owning a home is better than renting, financially speaking, if you can afford it - you are building equity, and will have a great tax break on writing off the mortgage interest - plus you are owning your own place.

Good luck!

Take the 30 year mortgage, as long as it does not have a penalty for pre-payment, and pay it down early. You can have the same result by making extra payments and instructing the bank to apply them to principal--you will pay down the mortgage earlier and pay less in interest. Still, if a month comes that you need to use that extra money for something else, you do not have a contractual obligation to pay it to the Lender. So , that is the best of both worlds. Make sure any loan you take does not have a prepayment penalty. Good luck!

Well basically I would get a 30 just so it is cheaper. But the last 15 years are basically all interest as opposed to a 15 year where you pay way less interest, but it won't matter since you are moving out fairly soon. Have you consulted your mortgage broker about this?