The 1031 Exchange Calculates That 30 Years Loan Brings The Monthly Payments Down
Posted on June 29, 2008
Filed Under Mortgage Smarts |
The monthly repayments for 30 year or 15 year fixed mortgage are just one important consideration for many people who are looking to buy a home. Of course the goal for most people with a mortgage is to pay it off early and save themselves a great deal of money in interest repayments. There are always things to take into account before signing documents. One important point is to ensure that the interest rate does not change during the life of the loan. There are nice advantages to purchasing a property using the 1031 exchange. Another requirement of a 1031 exchange is that the transaction is completed in forty-five days.
It seems that some lenders are happy to offer deals that appear too good to be true and they usually are. A fixed rate mortgage maintains a set interest rate during the period of the loan. For those individuals that do not like hidden surprises, this is always a benefit. When we were looking to buy a home, my wife and I decided to go for a loan with a 15 year fixed mortgage rate. A 1031 tax exchange is meant to be a way for people to save money while investing in property. This 1031 deferred exchange is a way to avoid the taxing of one’s money when selling a property if a property of equal or greater value is purchased.
The plan was to pay off the house as soon as possible but we did not want to be burdened with high monthly payments. When we considered fixed rate mortgages we also looked into even longer term loans that spanned 30 years as well. No-one likes the idea of having a mortgage when they are close to retirement, and we were no different, so it was still our hope that a 15 year fixed mortgage rate plan would still be an option. Too much pressure was placed on the early repayment of the mortgage loan.
We thought about it long and hard and despite the pressure we decided to go with the 30 year loan plan. There were many things that lead us into making this choice. Discovering my wife was having a baby was the most important reason. Her regular monthly income would become unreliable because she wanted to be at home raising our child. The downside to the 15 year fixed mortgage rate was the higher monthly repayment. For us it just was not feasible as we would just be in over our heads. The monthly payments on a 30 year loan were quite a bit lower. The 1031 real estate exchange allows for a person or business to place a larger down payment or purchase the properties outright. So 1031 exchange real estate law is very useful.
If we pay extra payments throughout each year then it would gradually reduce the principle sum owed. By doing this you can also reduce the term of the mortgage by quite a few years. This takes some discipline but it is well worth the effort it in the long term. Our first choice would have been to go for the short term 15 year fixed rate mortgage solution but this did not help with our more immediate situation. Anyway, everything worked out fine despite our hesitancy.
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