30 year and Invest or 20/25 year

ozzie16 wrote: ↑ I was/am in a similar situation. Was going to put 40% down and take a 25 year AM. Now I'm going forward with only 20% down and 30 year AM. With rates so low I'd rather hold on to the money and invest it, or leave it as a cash reserve for other opportunities. If rates go up or I don't find any appealing opportunities, I can just pay down 20% of the original mortgage every year.

It comes down to if you're comfortable with the payments and you cash flow. It's better for me to have access to a larger chunk of capital immediately and pay a few hundred extra per month in mortgage payments. Just be disciplined and don't treat it as free reign to spend that cash on frivolous stuff. Also, consider that 25 AM and higher downpayment might get you a better rate than 30 AM with only 20% down, weigh the options and see if they work for your risk tolerance. The gap between two now is pretty narrow so you'll still likely be beating it with a index fund return.

Topher86 wrote: ↑ Thank you. For a 30 year with 20% down I was quoted 1.74 for 5 year fixed and for 25 year it was 1.59. I think I can make up the difference with that on an index fund.