We’ve been tying up loose ends all week, getting ready to sell our current house and buy our new home. Our closing is set for Friday morning, and then the closing on the new house is on Monday. It feels like we’re never going to get everything packed up and moved out of her by Saturday, but I suppose we will.
We’ve got our final numbers on both sales now. We’ll net just over $42,000 from the sale of our house, and we need to show up at closing for the new house with about $45,000. So that works out just about perfectly. We decided to go with a 15 year mortgage on the new house, and we got a rate of 4.625%. The shorter loan term means that our monthly payments will be about $300 higher than our current mortgage payment. We debated for a while on that decision, but in the end the lower interest rate won us over. The HOA dues at the new house are only $50/year, as opposed to the $80/month that we pay now. So that reduces the difference in mortgage payments down to about $225/month. And for the last several years, we’ve made additional payments on our mortgage, ranging from $100 to $1000. So we feel comfortable with the slightly higher payment, given the lower interest rate and the shorter loan term that we’re getting in trade. We don’t have any debt other than the mortgage, which helped make the decision a little easier.
We’re going to focus on our emergency savings account for a while, just in case. But given the relatively small difference in mortgage payments, it was worth it to us to go with the 15 year loan. Our goal is to pay off the mortgage in about seven years, so for now we intend to pay quite a bit more than the required payment each month. But we feel confident that even if our job situation were to change, we could handle the new payments without too much stress.
I don’t know many people with 15 year mortgages. Have any of you opted for higher monthly payments in trade for a lower interest rate and shorter term? Are you glad you did, or do you wish you had taken out a 30 year loan?