Expert Tip

 

Consider a 15-year, fixed-rate mortgage. It will save you big money in interest in the long run, versus a 30-year or variable rate mortgage.

 

For example:

 

$1,000,000 purchase price

$800,000 loan amount with 30 year fixed @ 4.25%

Total interest over the 30 year term $616,786

Total cost of home $1,616,786

 

$1,000,000 purchase price

$800,000 loan amount 15 year @ 3.5%

Total interest over the 15 year term $229,430

Total cost of home $1,229,430

 

Pros & Cons to a 15 year mortgage:

 

Pros:

Lower interest rate, pay off home faster, almost 400k savings, after 15 years you can put your 401k and Roth IRA’s in overdrive or have an extra 5k a month for college.

 

Cons:

Locked in to a higher monthly payment

 

We also recommend that your monthly mortgage payment be less than 25% of your total take-home pay. We realize that we live in Silicon Valley and this is very difficult to do but try to get as close to 25% as possible. Most banks will loan up to 44%. This is not necessarily in your best interest.

 

It is unlikely that you can get a 15 year fixed loan and have the payment be less than 25% of your take home pay but this should be our goal in a perfect world.  


Coldwell Banker
1096 Blossom Hill Road Ste. 200
San Jose, CA, 95123
Jason Muth
Coldwell Banker

1096 Blossom Hill Road Ste. 200, San Jose, CA 95123

CalBRE License Number: 01159966