Taking A Home Loan? Keep This One Thing in Mind

ICG Real Estate Investments
15-Year Loan Or 30-Year Loan? There Can Be Only One Answer – And It’s Simple
One of the questions I am asked most often – by clients and people who attend my seminars is this: should we opt for a 15-year loan or a 30-year loan? My answer is simple – the 30-year loan every single time! And what about if the rates are lower with a 15-year loan? The 30-year loan is still your best choice. If there is a 40- or 50-year loan, choose that! Here’s why.

Choose the longest possible loan repayment plan.

Make this a rule. A rule written in stone. Consider this – what does an avocado cost today? Say about $2.25, right? What will it cost in about 14 years? It will cost more in the region of $4, you reckon? So $2.25 today will be worth about the same as $4 in 14 years. People who argue that longer loans entail a higher amount of interest payments to the bank forget to consider the true value of money and how it changes over time due to inflation. What might be a substantial monthly outflow now will look like a joke in 15 years, perhaps just enough for a fancy meal for two!
The 30-year loan is also the most flexible kind of loan. You can, of course, repay earlier if you can and you want to. You can repay in 15 years or even 10 years. But you don’t have to! With a 15-year loan you don’t have the 30-year option. What if something goes wrong and you have some unforeseen expenses, or if, god forbid, there are retrenchments where you work? The 15-year option would be difficult but the 30-year option is much easier! You can even pay more for a while and then revert to the lower repayment option. And when you have a lower monthly payment, you can afford to buy more homes; invest in more real estate!
In other words, you cannot afford not to take the gift that is the 30-year fixed rate loan. Check out this video to know more reasons why this is the only savvy option. I will also explain why inflation is your best friend when you have taken the 30-year loan. Go ahead and spend a few minutes watching this video – those few minutes may end up saving/making you a lot of money!