A Surprising Solution to the 15-Year vs 30-Year Mortgage Dilemma

Jon and Jen have an opportunity to buy their dream home and lock in a historically low interest rate. This is a pretty common scenario in today’s market. In fact, you may be thinking about buying a home or refinancing your mortgage to take advantage of today’s low rates. If so, here’s a powerful option to consider…

Jon and Jen are trying to decide whether a 30-year mortgage or a 15-year mortgage makes the most sense. Their mortgage broker showed them that even with an interest rate just 0.65% lower, the 15-year mortgage would save them almost two-thirds of the interest of a 30-year loan.

They decided the 15-year mortgage made the most sense. Their thinking was, “We’re both 48 now, and we plan to work until we’re 70. The sooner we get the house paid off, the sooner we can save more for the future. Plus, we really like the idea of saving almost $90,000 in interest.”

Mortgage Comparison

Principal and Interest Payments for a $250,000 Loan

15-Year Loan
30-Year Loan
Monthly Payment $1,678.75 $1,088.00
Difference in Payment $590.75
Loan Interest Rate 2.6% (APR) 3.25% (APR)
Total Interest Paid over the Length of the Loan $52,178 $141,686
Interest Saved with a 15-Year Loan: $89,508

Who wouldn’t want to save nearly $90,000 in interest?

But what if Jon and Jen – or you, if you are thinking about a new loan or a refi – could get the same end result you’d get with a 15-year mortgage, and also receive some valuable benefits on the side, with no additional cash outlay?

Jen and Jon asked their Bank On Yourself Professional, Wayne, if he had any thoughts on the subject. And Wayne did indeed have a strategy they hadn’t considered – a strategy that gave them some significant advantages over the 15-year mortgage. And it didn’t call for spending a single penny more!

Here’s the strategy Wayne suggested:

Step 1: Jon and Jen take out the 30-year mortgage, with the monthly payments of $1,088.

Step 2: They use the difference of $590.75 per month – the additional money they would have spent each month if they had a 15-year mortgage – to pay the premiums on a new Bank On Yourself-type high cash value, dividend-paying whole life insurance policy on Jon.

Step 3: After about 17 years, they could choose to use the cash value of the life insurance policy to pay off the remaining balance of the 30-year loan, thus owning their home free and clear.

Read: How Whole Life Insurance Policy Loans Work

There Are 7 Benefits of This Bank On Yourself Strategy:

Benefit #1: Jon will have $175,000 in new life insurance coverage on day one. And he’ll have peace of mind knowing that Jen will be better taken care of if he dies prematurely.

Benefit #2: Over time, without increasing their monthly payments, the death benefit of his life insurance policy could rise to as much as $422,000.

Benefit #3: Jon and Jen will be able to take advantage of what could be a once-in-a-lifetime opportunity to lock in a historically low interest rate – making their dream home even dreamier!

Benefit #4: They will never have the problem of being “house rich and cash poor.” Wayne explained, “The problem with pouring all your money into paying off your mortgage is all that money will be tied up in your house. Jen, what if Jon passes away and all you have left is your own income? Do you think you might have a difficult time finding a bank willing to loan you money? By putting some of your money into this life insurance policy instead, you’ll be building up cash value you can borrow against if you ever needed it … for any purpose at all … with no questions asked.”

Benefit #5: If Jon and Jen purchase their policy from the company recommended by their Bank On Yourself Professional, Jon’s policy will include a living benefit called an Accelerated Death Benefit. This benefit, which is added to Jon’s policy at no additional premium, gives Jon and Jen access to a portion of the policy’s death benefit in the form of an advance, if Jon is diagnosed with a qualifying medical event or condition such as a terminal illness, a specified medical condition (such as cancer or stroke, among others), or certain chronic illnesses.

Although Jon is in great health, he realizes that good health isn’t necessarily permanent. Both Jon and Jen realize this benefit is extremely valuable – and it can be theirs at no additional cost. Plus, if it turns out that Jon never needs these benefits, then he hasn’t wasted money on purchasing separate insurance to cover them. This flexibility allows the couple to adapt to whatever challenges life may throw at them. (The specifics of this benefit vary by state, so be sure to discuss the details with a Bank On Yourself Professional.)

Benefit #6: After they’ve made payments on their mortgage for 17 years, Jon and Jen should be able to take a policy loan to pay off the mortgage in full if they choose. And they could still have more than six figures of cash value remaining for Jon to take – tax free – to supplement his retirement income. Again, this strategy gives them the flexibility to meet life on their terms.

Benefit #7: Since Jon and Jen aren’t planning to retire until age 70 (after they pay off their home loan), they can redirect the money they were spending on mortgage payments to repay the policy loan if they choose, thus giving them even more tax-free income for retirement, with the flexibility to adapt to their financial situation at the time.

Who Can Benefit from this Strategy?

You could, if you’re between the ages of 40 and 55, with good credit, and you’re thinking of refinancing your home or buying a new one. If you like the idea of paying off your home in about half the time of a 30-year mortgage, while also giving yourself valuable living benefits at no additional cost, and having more flexibility over the course of many years, a Bank On Yourself Professional can help.

To get a referral to a Bank On Yourself Professional who can review your situation and goals and make recommendations to maximize the benefits you get – even without any additional out-of-pocket cost to you – request a referral and a free, no-obligation Analysis.

They can also refer you to a terrific mortgage brokerage specialist firm licensed in 49 states. I use this firm for my own family’s mortgages, and I can’t recommend them highly enough! You’ll love the White Glove Treatment you receive from them.

So click on this button now to take the next step:

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