You are doing a great job simplifying difficult to understand options for the younger generation. I especially love your CALM Moment to take breath and appreciate the learning process.
I'm going to share my perspective on this. Here is my rebuttal to the 30-year 'savings.' Whether I'm on a 15-year or 30-year, my budget as it relates to monthly mortgage does not change. For example, if my budget is 25% of my take-home pay and that means I can afford a $2000 mortgage, the only thing that the loan term really changes is the affordability (total house purchase price i.e. $300,000 vs. $400,000). Making sure my house is within that mortgage-to-income ratio, ensures that I have money already built into my monthly budget for investing. So, whether I buy on a 30-year or 15-year, I'm still investing beyond that. The truth is, when people buy on a 30-year, it's an increase on lifestyle. People don't go from a $2000 to a $1400 mortgage on a $300k house. They upgrade to the $400k house and pay $2000 anyway. Therefore, there is no difference to be invested. They want the "bigger, better, nicer" house. They're not really 'saving' more money; they've just bought bigger. So, after 15-years of investing what I would've been investing regardless of term length, on year 16, I'm then investing that PLUS my monthly mortgage amount while the person with the 30-year pays for double the amount of time and pays 10's of thousands extra in interest, to the tune of almost $100k more TO THE BANK. You end up WAAAAYYYY ahead when considering the fact that you can still invest when you purchase a home on a mortgage that is NOT too large of a percentage of your income. Also, when your house has a $0 mortgage, that translates to 0% risk of foreclosure. If you lose your job? You'll be ok. Got injured and can't work? You'll be ok. Hate your job and want to quit to pursue your REAL passion? Go ahead, you can afford it. You don't have any payments. You'd rather retire early and work part-time? SURE! YOU DO NOT HAVE ANY PAYMENTS! NOT A SINGLE ONE IN THE WORLD! A 15-year fixed-rate mortgage, no more than 25% of your take-home is ALWAYS the best option. The important thing is to have your home-buying budget IN PLACE AND STICK TO IT! By the way, I am a new subscriber. I absolutely LOVE your videos! Very informative on the process of purchasing real estate!
I would say that after paying off high interest debt, the next thing would be to have a nice cushy emergency fund before investing the extra into the mortgage or stocks. I really appreciate your videos and info. Made buying my home a lot less stressful. I knew what to expect and wasn’t unprepared for sudden costs that arose.
I went with 15 year because I know I’m not disciplined enough. 15 year keeps me on the straight and narrow. If I took on a 30 year, I know I wouldn’t do much investment on the side.
Great video! I thought that a 15 year was the best option since it saves in interest. But I do invest, and going with a 30 year and putting that extra money in the stock market will really make a difference!
This is obvious, and you mentioned it, but it should be noted that this is only true ***IF*** you bought a house that you could afford the payment on with a 15y mortgage and then chose to get a 30 year mortgage. If you're getting a 30y mortgage and the monthly payment is the maximum you can afford, this does not help you if you're investing nothing. So If you're calculating how much house you can afford based off a 30y mortgage, then this is not relevant to you. This is a great way to build wealth though. With interest rates being as low as they are right now, almost any other investment would net you more money than paying down your mortgage. But keep in mind the stock market tends to go up with inflation, and Inflation is not a guarantee. If the economy crashes, the suddenly paying down your mortgage actually can become the best investment being as it is a guaranteed return on your investment of whatever your interest rate is. My only point is there isn't a one size fits all best way to build wealth. It is a constantly evolving rollercoaster, and all these numbers are based on history. Nobody can predict the future.
Assuming stock market returns. Assuming a person will invest the difference 100% for 30 years straight (good luck). Assuming health and income are maintained throughout such a long period. I'll stick with paying off the mortgage and being completely debt free.
I disagree, you are forgetting two major points : 1. When you are healthy and young pay off the loan so that your family can live without any commitments of the loan if something happens to you. 2. When you take out the money from stock market you will be paying 15% capital gains which you did not factor in. So in nutshell for the sake of your family pay off the loan early.
Just came to say I'm using one of your playlist for asmr to sleep and osmosis. Its the best to help me shut my mind off!! I appreciate you! PS I do listen while awake too! 😃
Great scenario analysis. Can you post this model on your website so we can tweak the input variables to run different calculations? e.g. Different annual rate of returns from equities. Thanks!
I got a 15 years mortgage 🏠 but I already paid half of my loan in 3 years because I’m making that extra payment. I’m not sure what I’m doing is correct but I wish I could have invested the extra money on the stock market instead 🤑
Great job on paying off half your loan so quickly! While investing can offer higher returns, paying down your mortgage early can save you tons in interest, and it's a guaranteed return on your money.
Best of all worlds; 15 year affordable home living below your means plus $680 invested per month for first 15 years and then mortgage payment plus $680 for future years
With the mortgage interests rates of today being around 7%, would the "30s" plan still apply? I'm not sure how accurate the 7% gain on investments is true for today. If it was still 7%, then they would cancel each other out?
Hi, I went through the thought process of 15 vs 30 year multiple times and I still do😀. I agree with you on the current mortgage rates on primary residence. I'm looking for my rental properties where the interest rate is at 3.85%. What is your suggestion... i have 30 year loan ..pay off quickly by putting back the cash as it is 15 years? Or use that capital and invest in another rental? What about paying extra into principle for the first 5 years which has bigger impact in reducing the term? . Love to see numbers backed advice.. Thanks.
Hmm, I think both could be solid options! Definitely want to run the numbers on it. My assumption would be a 30 year would still best best assuming capital for another investment isn't an issue.
Great video once again -Many thanks for that! which do you think is better ?____ higher income with more existing debt or lower income with zero debt? I believe debt to income ratio will be the same for a borrower making $40000 income with $ 20000 outstanding debt and a $20000 income with zero debt, which one is viewed more positively by a lender? Many thanks for your help in advance! Also Do you have ball park range interest for a portfolio loan for FHA these days?
The amount of income doesn't really matter to lenders, but the DTI does. A $40,000/yr income with $500/mo in debt payments has a 15% DTI before the projected housing payment. And 36% after an estimate $700/mo housing payment. That same scenario with $0/mo in debt and an estimated $700/mo housing payment with a $20,000/yr income is a ratio of 42%. So, the 36% DTI would look better than the 42% DTI. Portfolio loans and FHA loans are different. This link can help you explore rates: www.consumerfinance.gov/owning-a-home/explore-rates/
@@WinTheHouseYouLove Thank you Kyle, that was helpful! But where did you get the monthly payment of $500 from? Is it a random choice or is there a formula? If the $500 is a random choice, what if the minimum monthly payment becomes $700? In that case, the two borrowers will have the same 42 DTI! If it is more than $700, then the one with zero debt is better off! As for Portfolio loans, I know they are different and the above link does not cover them. I have found it very hard to find portfolio loan rates (especially the ones based on 1099). Many thanks again for your help!
Z Mack $500/mo is the estimated payment on $20,000. There’s isn’t a mortgage calculation that subtracts debt from gross income because debt obligations don’t work like that.
What happens if you pay your mortgage off before the 30 years ? Do you get the title or do do you have to keep paying even though you already reached your full price?
Kyle, I always get hung up on the idea of investing before a house is paid in full even if it's a better rate of return because it's essentially borrowing money to invest. Is there not an argument to be made to pay off the house in it's entirety before putting excess into the stock market?
Absolutely! I think compelling arguments can be made on both sides. Ultimately, the best plan is the one that works for you that you are comfortable and you can stick with. No matter what the math says, the best course is the one that works for you and your family's plans.
Hi Kylie! Thanks for the useful information. I have a good credit score and plan on doing 20% down payment but in the current market situation and with the talks of recession coming soon would you suggest conventional loan? Thanks!!!
Hi Kyle, I recently discovered you as I am researching all I can for my home buying journey. This will be my first home, and I've looked into the FHA loan a little. However, I do plan on putting 20% and my credit is good. Would you think a conventional loan would be better? Maybe you can explain the pros and cons to these 2 loans :)
Hey! I'm glad you're here! If you're looking at putting 20% down and your credit is good, then I'd look at conventional. Check out this video → ua-cam.com/video/Ip2pvMJ2s_Q/v-deo.html
If life use easy this would make sense:/ but most people don't have enough self control to use that 600 difference properly a 15 year forces someone to use the difference to quickly get out of debt.
What about the situation where this is not your forever home and may sell it 7-10 yes down the lane? Does it not make sense to do the 15 or 30modified and pay more towards your principle?
One issue, is that the stock market is not a good option in the near future, with the economy facing trouble. Stock market historically has been good to invest, but has gone up and down.
What I love about your videos is that it’s none of that clickbait nonsense.
You’re true to your word(s) and enjoyable to watch/listen to.
Thank you so much!!
Win The House You Love you’re welcome!!
Yeah, and no hyperbolic shocked looking thumbnails and junk like that. Thanks, Kyle.
YOU ARE SO FINE! THANKS FOR THE USEFUL INFO!
I'm glad to help!
You are doing a great job simplifying difficult to understand options for the younger generation. I especially love your CALM Moment to take breath and appreciate the learning process.
Thank you so much for watching!! :)
YES!! THANK YOU. This is the video I’ve wanted and waited for. Much appreciated.
Glad to help!
I'm going to share my perspective on this. Here is my rebuttal to the 30-year 'savings.'
Whether I'm on a 15-year or 30-year, my budget as it relates to monthly mortgage does not change. For example, if my budget is 25% of my take-home pay and that means I can afford a $2000 mortgage, the only thing that the loan term really changes is the affordability (total house purchase price i.e. $300,000 vs. $400,000). Making sure my house is within that mortgage-to-income ratio, ensures that I have money already built into my monthly budget for investing. So, whether I buy on a 30-year or 15-year, I'm still investing beyond that. The truth is, when people buy on a 30-year, it's an increase on lifestyle. People don't go from a $2000 to a $1400 mortgage on a $300k house. They upgrade to the $400k house and pay $2000 anyway. Therefore, there is no difference to be invested. They want the "bigger, better, nicer" house. They're not really 'saving' more money; they've just bought bigger. So, after 15-years of investing what I would've been investing regardless of term length, on year 16, I'm then investing that PLUS my monthly mortgage amount while the person with the 30-year pays for double the amount of time and pays 10's of thousands extra in interest, to the tune of almost $100k more TO THE BANK. You end up WAAAAYYYY ahead when considering the fact that you can still invest when you purchase a home on a mortgage that is NOT too large of a percentage of your income.
Also, when your house has a $0 mortgage, that translates to 0% risk of foreclosure. If you lose your job? You'll be ok. Got injured and can't work? You'll be ok. Hate your job and want to quit to pursue your REAL passion? Go ahead, you can afford it. You don't have any payments. You'd rather retire early and work part-time? SURE! YOU DO NOT HAVE ANY PAYMENTS! NOT A SINGLE ONE IN THE WORLD! A 15-year fixed-rate mortgage, no more than 25% of your take-home is ALWAYS the best option. The important thing is to have your home-buying budget IN PLACE AND STICK TO IT!
By the way, I am a new subscriber. I absolutely LOVE your videos! Very informative on the process of purchasing real estate!
🤣🤣🤣 @ Calm moment.....the whole video is calm. 🤗👍🏼
Hahahah I'm glad you think so!
Great video and with the calm moment even better. Thank you
Thanks! I'm glad you like it!
Your not only informational- but your voice is soothing too! Ha! Great video!
Thanks so much! I'm glad it was helpful :)
that ASMR voice..he know what he doing! LOL
@@cbnboy34 😆😆😆
This is so helpful! Thank you!
You're so welcome!
I would say that after paying off high interest debt, the next thing would be to have a nice cushy emergency fund before investing the extra into the mortgage or stocks.
I really appreciate your videos and info. Made buying my home a lot less stressful. I knew what to expect and wasn’t unprepared for sudden costs that arose.
That's a great idea! Always good to have an emergency fund!
Thanks so much, I'm so glad they've been helpful. And congrats on your new home!!
Thanks for the explanation! We were trying to figure out the better outcome of each option and now we have a better view of our choice!
Glad to help!
I went with 15 year because I know I’m not disciplined enough. 15 year keeps me on the straight and narrow. If I took on a 30 year, I know I wouldn’t do much investment on the side.
That's a great solution too! You know what works for you and that will be more beneficial than anything else :)
Great video! I thought that a 15 year was the best option since it saves in interest. But I do invest, and going with a 30 year and putting that extra money in the stock market will really make a difference!
Thanks for watching!
Thanks for dumbing it down for me..great video very informative and great break down ..thanks so much man
No worries! Thanks for watching!
This is obvious, and you mentioned it, but it should be noted that this is only true ***IF*** you bought a house that you could afford the payment on with a 15y mortgage and then chose to get a 30 year mortgage. If you're getting a 30y mortgage and the monthly payment is the maximum you can afford, this does not help you if you're investing nothing. So If you're calculating how much house you can afford based off a 30y mortgage, then this is not relevant to you. This is a great way to build wealth though. With interest rates being as low as they are right now, almost any other investment would net you more money than paying down your mortgage. But keep in mind the stock market tends to go up with inflation, and Inflation is not a guarantee. If the economy crashes, the suddenly paying down your mortgage actually can become the best investment being as it is a guaranteed return on your investment of whatever your interest rate is.
My only point is there isn't a one size fits all best way to build wealth. It is a constantly evolving rollercoaster, and all these numbers are based on history. Nobody can predict the future.
Absolutely! Great reminder!
learning more and more!
Love it, keep it up!
Assuming stock market returns. Assuming a person will invest the difference 100% for 30 years straight (good luck). Assuming health and income are maintained throughout such a long period.
I'll stick with paying off the mortgage and being completely debt free.
Stick with what works for you :)
@@WinTheHouseYouLove Just pointing out that hypotheticals take no consideration for risk involved, which makes it a fairy tale.
I disagree, you are forgetting two major points :
1. When you are healthy and young pay off the loan so that your family can live without any commitments of the loan if something happens to you.
2. When you take out the money from stock market you will be paying 15% capital gains which you did not factor in.
So in nutshell for the sake of your family pay off the loan early.
If it works for you, go for it
Very educational, detailed video. Thanks a lot 🙏
Glad it was helpful!
Just came to say I'm using one of your playlist for asmr to sleep and osmosis. Its the best to help me shut my mind off!! I appreciate you!
PS I do listen while awake too! 😃
Wow, thank you!
Great scenario analysis. Can you post this model on your website so we can tweak the input variables to run different calculations? e.g. Different annual rate of returns from equities. Thanks!
Thanks for watching! Maybe I can do something like that in the future
CalmMoment is genius
Thanks!
great video. the whole video is calm :)
Thank you! Keep calm and have a home. :)
I got a 15 years mortgage 🏠 but I already paid half of my loan in 3 years because I’m making that extra payment. I’m not sure what I’m doing is correct but I wish I could have invested the extra money on the stock market instead 🤑
Great job on paying off half your loan so quickly! While investing can offer higher returns, paying down your mortgage early can save you tons in interest, and it's a guaranteed return on your money.
Damn your voice makes these numbers less scary..!!! appreciate you!! 🥰
Haha thanks!
Nice! Typically go with 30! 😻
Awesome!
Great video, in spite of UA-cam smothering it with ads. 6 commercial breaks in 16 mins... Jeez
Sorry to hear, I wish I could control that. Even if you demonetize UA-cam will still place ads
@@WinTheHouseYouLove understood. UA-cam ain't perfect, and I should emphasize that this is an excellent video and worth wading through the ads.
Best of all worlds; 15 year affordable home living below your means plus $680 invested per month for first 15 years and then mortgage payment plus $680 for future years
Yes, that really a nice way to have a house and have future investment at the same time. :)
With the mortgage interests rates of today being around 7%, would the "30s" plan still apply? I'm not sure how accurate the 7% gain on investments is true for today. If it was still 7%, then they would cancel each other out?
this is amazing. thanks
Thank you so much for watching!! :)
Hi, I went through the thought process of 15 vs 30 year multiple times and I still do😀. I agree with you on the current mortgage rates on primary residence. I'm looking for my rental properties where the interest rate is at 3.85%. What is your suggestion... i have 30 year loan ..pay off quickly by putting back the cash as it is 15 years? Or use that capital and invest in another rental? What about paying extra into principle for the first 5 years which has bigger impact in reducing the term? . Love to see numbers backed advice.. Thanks.
Hmm, I think both could be solid options! Definitely want to run the numbers on it.
My assumption would be a 30 year would still best best assuming capital for another investment isn't an issue.
Great video once again -Many thanks for that! which do you think is better ?____ higher income with more existing debt or lower income with zero debt? I believe debt to income ratio will be the same for a borrower making $40000 income with $ 20000 outstanding debt and a $20000 income with zero debt, which one is viewed more positively by a lender? Many thanks for your help in advance! Also Do you have ball park range interest for a portfolio loan for FHA these days?
The amount of income doesn't really matter to lenders, but the DTI does.
A $40,000/yr income with $500/mo in debt payments has a 15% DTI before the projected housing payment. And 36% after an estimate $700/mo housing payment.
That same scenario with $0/mo in debt and an estimated $700/mo housing payment with a $20,000/yr income is a ratio of 42%.
So, the 36% DTI would look better than the 42% DTI.
Portfolio loans and FHA loans are different. This link can help you explore rates: www.consumerfinance.gov/owning-a-home/explore-rates/
@@WinTheHouseYouLove Thank you Kyle, that was helpful! But where did you get the monthly payment of $500 from? Is it a random choice or is there a formula? If the $500 is a random choice, what if the minimum monthly payment becomes $700? In that case, the two borrowers will have the same 42 DTI! If it is more than $700, then the one with zero debt is better off! As for Portfolio loans, I know they are different and the above link does not cover them. I have found it very hard to find portfolio loan rates (especially the ones based on 1099). Many thanks again for your help!
Z Mack $500/mo is the estimated payment on $20,000. There’s isn’t a mortgage calculation that subtracts debt from gross income because debt obligations don’t work like that.
@@WinTheHouseYouLove Thank you Kyle!
Nice video. Keep up the good work. Do mortgage lenders usually use 2 months or 3 months of bank statements for assets?
Thanks! Just 2 :)
What happens if you pay your mortgage off before the 30 years ? Do you get the title or do do you have to keep paying even though you already reached your full price?
You get title to the home when you purchase. Once the loan is paid off, you don't pay anymore. The only expenses are taxes, insurance, and up-keep.
SIR I LOVE YOUR EXPLANATION!!! CAN YOU ALSO TELL US HOW TO INVEST FOR RETIREMENT AND WHERE TO START? I AM VERY ILLITERATE.
GOD BLESS YOU BROTHER
Thanks! I'm not planning on doing any investing content for the time being
Kyle, I always get hung up on the idea of investing before a house is paid in full even if it's a better rate of return because it's essentially borrowing money to invest. Is there not an argument to be made to pay off the house in it's entirety before putting excess into the stock market?
Absolutely! I think compelling arguments can be made on both sides.
Ultimately, the best plan is the one that works for you that you are comfortable and you can stick with. No matter what the math says, the best course is the one that works for you and your family's plans.
Thank you!!
You're welcome!
Hi Kylie!
Thanks for the useful information. I have a good credit score and plan on doing 20% down payment but in the current market situation and with the talks of recession coming soon would you suggest conventional loan?
Thanks!!!
Conventional is the most ideal loan for a good credit score :)
@@WinTheHouseYouLove thank you!! 😊
What about now with rates around mid 7%?
I'll work on an updated video :)
Now I just need an update vid with with 5%+ rates and a recession outlook 🤦🏻♂️
I'll look into making an updated video
Not sure how this considers the difference in interest saved on a 15 yr vs on a 30 yr
It's in the Total Cost section. It literally says "Closing cost, interest, PMI"
Hi Kyle, I recently discovered you as I am researching all I can for my home buying journey. This will be my first home, and I've looked into the FHA loan a little. However, I do plan on putting 20% and my credit is good. Would you think a conventional loan would be better? Maybe you can explain the pros and cons to these 2 loans :)
Hey! I'm glad you're here! If you're looking at putting 20% down and your credit is good, then I'd look at conventional. Check out this video → ua-cam.com/video/Ip2pvMJ2s_Q/v-deo.html
@@WinTheHouseYouLove ahh thank you so much!! ☺️
Isn’t there a tax from gains in the stock market though? Wouldn’t that lower that 950$ to around the range of a 15 year loan?
Yes, there's tax. There is also tax on the sale of the home. Thanks for watching!
I have been back and forth on 15vs30. I’m currently getting over 25% rate of return on my 401k. Leaning toward 30 now more than ever.
Go for it :)
If life use easy this would make sense:/ but most people don't have enough self control to use that 600 difference properly a 15 year forces someone to use the difference to quickly get out of debt.
If that’s what you want go for it
What about the situation where this is not your forever home and may sell it 7-10 yes down the lane? Does it not make sense to do the 15 or 30modified and pay more towards your principle?
If that works better for your situation, go for it! :)
What if I don’t know what to invest in the stock market
The UA-cam channel Plain Bagel has incredible and honest investing info
do lenders look at your age and decide for you? what if you may not live that long/30 yrs?
No one is legally allowed to discriminate based on age. You can be 120 and still qualify for a 30 year mortgage.
Once we pay extra do we have to keep doing that or just pay extra when we want too?
Just when you want to
Awesome
Thank you so much for watching!! :)
15 or 30 year mortgage asmr
30 years plus extra, extra payments.
👍
One issue, is that the stock market is not a good option in the near future, with the economy facing trouble. Stock market historically has been good to invest, but has gone up and down.
For sure