Chief Executive Officer of E Mortgage Management, LLC
Gregory Englesbe knows from his experience that to choose a mortgage wisely, you should think about it as a financial tool, not as debt. Your first decision when it comes to a mortgage usually has to do with choosing between a fifteen-year mortgage and a thirty-year one. There are also mortgages for ten, twenty, and even forty years, but the decision process is the same.
Your qualifications are the main consideration in this matter. If you can’t afford payments on a fifteen-year mortgage, then you shouldn’t even be considering it. If you can afford the payments on a fifteen-year loan, you need to decide on what is more important for you: a smaller monthly payment or your ability to build wealth. Those who want smaller payments are usually thinking about the present. People that are looking to build wealth tend to be concerned more with the future.
Let’s consider a $100,000 loan. The payment on a thirty-year loan for this amount at seven percent would be $665. The same amount of money as a fifteen-year loan will probably have an interest rate of around 6.75% and a payment of $885. If you are looking to have a smaller monthly payment, you’ll be paying $220 less a month with the thirty-year option.
However, five years after you start paying off the mortgage, you would have repaid $22,933 on the fifteen-year loan and only $5,868 on the thirty-year loan. This means that if you are looking to build wealth, the first option would save you $17,065 in mortgage payments to a company similar to the one that Mr. Gregory Englesbe operates.