Why Shouldn’t I Get A 30-Year Mortgage?

[Music] brought to you by the ramsy network app download today to go further with Ramsey today's Ramsey at Network app question is from Mason and he asks I would like a reason a reasonable explanation on why you only recommend a 15-year mortgage why shouldn't I take a 30-year out and dump extra cash into an ETF earning 10 to 12% and at the end of 30 years I'd love Lage my house and pay it off also have around $700,000 to spend from my investments Mason you're smarter than Mason you're smarter than us you got us you got us on this one man I hadn't thought of that before yeah where to go man wow we'll just change our whole policy no so Mason the the the biggest goal when it comes to your money one of the well not the biggest one of them starting out is to become debt free as soon as possible and so for a lot of people people this journey of even paying their house off which is a obviously the largest asset most people have it's going to take around nine years and so there is a psychological change that occurs when you know here is my payment and even though my intentions are good on a 30e to either pay it like it's a 15 put what what would have been on the mortgage but now I can invest that money instead you know all of those are good intentions and what we see over and over again is that human behavior can definitely Trump what we had planned and things come up life happens and if you think over you know 10 15 20 years 30 years there's a lot of life to happen so um the probability that you would actually do this right and do it every single month consistently is probably pretty low considering the we're talking about 30 years 30 years so the idea of doing the 15 I mean it's just it there's mathematically it's faster it forces you into a faster payment plan and then when people are doing the baby steps and they get to this step they're paying it off in nine years versus 15 so you'll be paying it off earlier now some people I know get a 30-year because the rate is better you know the payments is uh more reasonable for their budget right there's a lot of different reasons but again it's it's putting systems in place that the rhythm of your money in your life will get you to where you want to go as fast as possible and that's the 15 over the 30 and what's wild about mortgages too is you know even an extra payment one extra payment on a 30-year mortgage on a half a million dollar house at like a 4% interest rate you pay it off four years faster and you save it was like I think close to maybe $60,000 in interest one extra payment a year that's on a 30 so if you imagine a 15 and doing that an extra year or doing four extra payments a year right like you can just see the map it's just yeah and when you're talking about a house and you're talking about a mortgage and interest in time it's just big so when you can like condense it and do it as fast as possible you're going to be better off well and I I think it's important to call this out um and I've noticed this among like George and like we just call them the finance Bros but like the guys with the spreadsheets that they roll out 30 years and they put all these assumptions in there they've never read an ASM TB and they have never um experience the pain of when the whole thing collapses right when it crashes and when the roller coaster goes way way way down or when you lose your job or your wife gets cancer or when your kid passes away or you have to move or you get laid off or whatever and I think if your if your goal in life is to squeeze every last potential gap between an interest payment and a potential earned um uh return on some sort of fund that you're trading knock your lights out knock your lights out and we'll be here when you wreck when you have taken call after call after call of somebody saying hey they're taking my mom's house away because she fill in the blank or my wife and I have to move to go take care of my dad cuz he fell and now we have dot dot dot or my wife wants to stay home we can't afford the morage afford so if if your if your goal is to always be looking for the spread and try to cover the spread this isn't this isn't what we're trying to sell you what we're trying to sell you is a total total rejection of that way of thinking we're trying to sell you something that the American household no longer has and that is peace that is the ability to sleep at night I will gladly gladly cash out the gap between a 30-year mortgage and a 15-year mortgage right now which isn't a ton right this second in fact I think the 30-year mortgage rates may be less than the 15E because they're trying to sell those because they can hold on to them longer I would gladly sell that over this this imaginary 30-year return I would have on this little bit of money if I constantly did this every month for 30 years and nothing bad ever happened to my family right yeah I would gladly trade that Gap knowing that no one could ever take my house away period ever and it's I call it my sleep tax it's my soul tax I just I just walk around knowing you can't take my house yeah no matter what happens my mom gets cancer my wife passes away they cannot take my house and so if that's not what you're into MH there's no math problem that we're going to sit down and map it out for you right right cuz that's and that's the thing too about pay your mortgage off early because we hear kind of similar argument oh my gosh why would I pay it off early why would I not just yeah invest that money or if I have this money it's making more you know in the market versus my 2% interest rate that I got 10 years ago you know why would I ever unplug something that's making that much to throw at debt that's only like a 2 to 3% interest rate and it's that exact it's the exact same thing because peace and you can't take my calmness doesn't show up on a spreadsheet it just doesn't and we we had our money and marriage weekend last weekend here um with about 600 couples or so and there were a lot on baby step 7even which means they've paid off their house there was a good amount of them I was kind of surprised when I was asking what baby step everyone was on there was a good amount of baby step seven and I was like oh wow and I said okay so for those of you that paid off your house keep your hand up if you regretted it zero zero hands were still up yeah because it's like no you when you really don't have a mortgage payment you're not like Dad G it and if you are still you can always borrow back on your equity and go and invest it right I mean like you can always get back into debt and because there's something to be said about about us as people our our human soul at a very very deep level rests in a place that does not show up on an Excel sheet just doesn't and so we talk more about the person than we do the math on the show because we really believe in the people we believe in you if you're listening or watching you are the solution to your problems you are the one going to make choices in your life like empowering who you are as a whole person not the little Financial geek you know over here you as a whole person as a as a son as a daughter as a husband as a wife as a mom as a dad uh as a friend like all these elements of you money is just a part of it but on this show it's the thing that ends up being magnified into a lot of our dysfunction is what we end up seeing and so you can't forget you are a person you are a whole person and that peace is part of it it's not always the math and to you leverage people you need to go read wle Barry you need to go read Nim TB people who love risk because I love risk but the the goal of risk I actually do I'm kind of a conservative risky but I love it um the thing that the the the modern kids that are all into like Risk and leverage I'm going to go is you can't leverage something that if the risk doesn't pay out you lose it all right and there's no better way to risk when you have a house when you are your own bank and when your kid's school is taken care of bro then go to Vegas then you can play right then you can start doing these things but this leverage there's a fulcrum to leverage and if your fulcrum is your home dude they're going to come take your house the market doesn't ride Bulls forever they will come take your home and that just tells me you watch a lot of Instagram and a lot of Tik Tok and you know how to make use chat GPT to make some cool uh Excel Al rithms you don't understand what it's like to sleep in a house that you don't owe money on y that's right what it is they can't take your house away I'm all about leverage I'm all about risk I love it but I don't risk my wife's house I just don't yeah and when you get that through your mind then you can play these well then I'm going to leverage my house and pay it off but have around play that game after you have you've covered the ground floor and I think it's that's part of the misn or two of you know that that this 700 Grand you know that he has you know typed out you know there there's something about also just chasing money to a degree that there is a level of emptiness out there y'all money is not a God it is not an idol it will not fulfill you like it's not but it also will destroy you if you don't have peace around it so getting yourself in a healthy position mathematically is very smart that's what we want you to do but then on top of that knowing that it has a placement in your life that you're not constantly chasing because the Finish Line the Finish Line Mason is always going to move it's always going to move so contentment is key in this as well oh