30 yr. or 15 yr. mortgage? Which builds more wealth? I retire in 20 yrs. I’d invest the monthly difference.
I’ve got 18 years until retirement and I’m looking at buying a home. I was planning on a 15 year mortgage so I could own the joint when I’m retired. My lender is trying to sell me on 30 yr vs 15 year mortgage. He says with the 30 year, I can invest the monthly difference in payments about $ 500.00/ month in a tax deferred account and be way ahead in 15 years…I could pay off the mortgage and have big money in my pocket vs. just pay off the mortgage.(with a 15 yr mortgage). What doesn’t make sense to me is the fact that today’s loan rates don’t seem to allow sufficient spread against what I could earn with conservative investing. 6.2 to 7% mortgage rate seems like the same percent return I might get from a reasonably diversified investment. This seems to me like a wash. What am I not understanding? FWIW I am pretty good at saving. I’m an Automatic Millionare in the making….not boasting but I read that book and found it mirrored the stuff I’ve already been doing with my finances