Is a 30-year mortgage preferable to a 15-year mortgage?

Research output: Contribution to journalArticle

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Abstract

Better financial results accrue to some borrowers when they select a 30-year mortgage coupled with a simultaneous investment plan rather than a 15-year mortgage term and a subsequent investment plan. These results are particularly applicable in a low mortgage rate environment; however, for the vast majority of borrowers, there remains a significant probability that the 30-year mortgage is the better mortgage product even in higher mortgage rate scenarios. Further, the financial benefit associated with a 30-year mortgage increases as the borrower's marginal tax rate and risk tolerance increase.

Original languageEnglish (US)
Pages (from-to)14-21
Number of pages8
JournalJournal of Financial Counseling and Planning
Volume17
Issue number1
Publication statusPublished - Jan 1 2006

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Keywords

  • Debt planning
  • Home mortgage
  • Retirement
  • Retirement planning

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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