Recently the WSJ published an article titled “The Case Against 30-Year Mortgages.” They claim the main obstacle for millennials is “an insidious financial instrument so predatory and deceptive that it has warped the housing market for nearly a century.” The argument is that subsidized credit raises prices.
Keep in mind that in an era of inflation, a 30 year fixed rate mortgage is an instrument which builds financial wealth for the borrower. This is HOW you make it work in your favor. Become educated on amortization schedules. When you have an accurate amortization schedule for your loan, you have a flexible blueprint for reducing the total interest you pay, as well as paying off your loan sooner. But you can always just pay your regular 30 year principal and interest if you have a period of time when you cannot afford to devote extra funds to paying off your loan. If you do devote extra funds to pay down your principal, you have earned the equivalent of your loan’s interest rate on those funds in addition to saving on interest over the life of your loan.
Here’s a link to do the math…
