query: 15 year mortgage vs 30 year paid off in 15

positive: Your calculations are correct if you use the same mortgage rate for both the 15 and 30 year mortgages.  However, generally when you apply for a 15 year mortgage the interest rate is significantly less than the 30 year rate.  The rate is lower for a number of reasons but mainly there is less risk for the bank on a 15 year payoff plan.

positive: "Why would anyone ever get a 15 year instead of just paying off a 30 year in 15 years? Because the rate is not the same. Never that I've seen in my 30 years of following rates. I've seen the rate difference range from .25% to .75%. (In March '15, the average rate in my area is 30yr 3.75% / 15yr 3.00%) For a $150K loan, this puts the 15yr payment at $1036, with the 30 (at higher rate) paid in 15 years at $1091. This $55 difference can be considered a flexibility premium,"" as it offers the option to pay the actual $695 in any period the money is needed elsewhere.  If the rate were the same, I'd grab the 30, and since I can't say ""invest the difference,"" I'd say to pay at a pace to go 15, unless you had a cash flow situation. A spouse out of work. An emergency that you funded with a high interest rate loan, etc. The advice to have an emergency fund is great until for whatever reason, there's just not enough.  On a personal note, I did go with the 15 year mortgage for our last refinance. I was nearing 50 at the time, and it seemed prudent to aim for a mortgage free retirement."

positive: If the interest rate in both mortgages is the same, then yes, you will end up paying the same amount in interest if both are paid off in 15 years. However, in practice, almost always a 15-year mortgage will have a much lower interest rate that a 30-year mortgage. Also, if you are thinking of taking out a 30-year mortgage with the intention of paying it off early, make sure it does not have an early payment penalty; this is a penalty the bank will charge you if you pay back the loan early.

positive: "Yes.  It does cost the same to pay off a ""15 year in 15"" year versus a ""30 year in 15 year"" mortgage.  After all, the 30 year amortization period is only used by the lender to calculate the monthly payment he'll expect, while, unbeknownst to him, you are using a 15 year amortization and the same rate to calculate the payments you'll really make. One factor:  Can you make extra payments at the level you want, without incurring penalties from the lender?  Most mortgages have prepayment limits.  After all. he's seeing his nice steady 30 years of cash flow suddenly shortened.  He has to go out and find someone else to lend the unexpected payments to... EDIT:  Closed mortgages, with pre-payment charges are the norm here in Canada;  open mortgages predominate in the US  http://www.cmhc-schl.gc.ca/en/corp/nero/jufa/jufa_018.cfm"

positive: All of the answers given so far are correct, but rather narrow. When you buy a 30-year-mortgage, you are buying the right to pay off the debt in as long as 30 years.  What you pay depends on the interest rate and how long you actually take to pay it off (and principal and points and so on). Just as you are buying that right, the mortgager is selling you that right, and they usually charge something for it, typically a higher rate.  After all, they, and not you, will be exposed to interest risk for 30 years. However, if some bank has an aneurism and is willing to give you a 30-year loan for the same price as or lower than any other bank is willing to go for a 15-year loan, hey, free flexibility.  Might as well take it.  If you want to pay the loan off in 15 year, or 10 or 20, you can go ahead and do so.

positive: Besides the reason in @rhaskett's answer, it is important to consider that paying off a 30-year mortgage as if it was a 15-year is much more inconvenient than just paying the regular payments of a 15-year mortgage.  When you pay extra on your mortgage, some lenders do not know what to do with the extra payment, and need to be told explicitly that the extra needs to be applied toward the principal.  You might need to do this every month with every payment.  In addition, some lenders won't allow you to set up an automatic payment for more than the mortgage payment, so you might need to explicitly submit your payment with instructions for the lender each month, and then follow up each month to make sure that your payment was credited properly.  Some lenders are better about this type of thing than others, and you won't really know how much of a hassle it will be with your lender until you start making payments. If you intend to pay it off in 15 years, then just get the 15-year mortgage.

positive: "Consider the ""opportunity cost"" of the extra repayment on a 15 year loan.  If you owe money at 30% p.a. and money at 4% p.a. then it is a no brainer that the 30% loan gets paid down first. Consider too that if the mortgage is not tax deductable and you pay income tax, that you do not pay tax on money you ""save"". (i.e. in the extreme $1 saved is $2 earned). Forward thinking is key, if you are paying for someone's college now, then you would want to pay out of an education plan for which contributions are tax deductable, money in, money out. In my country most mortgages, be they 15,25,30 years tend to last 6-8 years for the lender. People move or flip or re-finance.  I would take the 15 for the interest rate but only if I could sustain the payments without hardship. Maybe a more modest home ?   If you cannot afford the higher repayments you are probably sailing a bit close to the wind anyway.   Another thing to consider is that tax benefits can be altered with the stroke of a pen, but you may still have to meet repayments."

positive: Other people have belabored the point that you will get a better rate on a 15 year mortgage, typically around 1.25 % lower. The lower rate makes the 15 year mortgage financially wiser than paying a 30 year mortgage off in 15 years.  So go with the 15 year if your income is stable, you will never lose your job, your appliances never break, your vehicles never need major repairs, the pipes in your house never burst, you and your spouse never get sick, and you have no kids. Or if you do have kids, they happen to have good eyesight, straight teeth, they have no aspirations for college, don't play any expensive sports, and they will never ask for help paying the rent when they get older and move out.  But if any of those things are likely possibilities, the 30 year mortgage would give you some flexibility to cover short term cash shortages by reverting to your normal 30 year payment for a month or two. Now, the financially wise may balk at this because you are supposed to have enough cash in reserves to cover stuff like this, and that is good advice. But how many people struggle to maintain those reserves when they buy a new house?  Consider putting together spreadsheet and calculating the interest cost difference between the two strategies. How much more will the 30 year mortgage cost you in interest if you pay it off in 15 years? That amount equates to the cost of an insurance policy for dealing with an occasional cash shortage. Do you want to pay thousands in extra interest for that insurance? (it is pretty pricey insurance) One strategy would be to go with the 30 year now, make the extra principal payments to keep you on a 15 year schedule, see how life goes, and refinance to a 15 year mortgage after a couple years if everything goes well and your cash reserves are strong. Unfortunately, rates are likely to rise over the next couple years, which makes this strategy less attractive. If at all possible, go with the 15 year so you lock in these near historic low rates. Consider buying less house or dropping back to the 30 year if you are worried that your cash reserves won't be able to handle life's little surprises.

positive: "I just wanted to point out that the most ""leverage"" for pre-paying occurs at the very beginning of the mortgage, and declines rapidly after that. So, your very best scenario is to get the 30-year, and make one extra payment entirely to principal the first month of every year. This causes the amortization to drop by 96 payments, to about 22 years. I don't know of any other way that you can get nearly 4 times value for your money (22 payments extra to save 96 payments later). After that, reducing from 22 to 15 years takes more of your money for the same result, but do it if you want. I actually did this, and it put me way ahead when I sold the house about 12 years later."

positive: Actually the extra payment comes off the back end of the mortgage. So technically the mortgage is ony reduced one month.  However, banks always recalculate the amortization table when the last payment is paid or a payoff amount is requested. There is a difference between the two situations but that is a minor amount. The 30 year note offers flexibility that the 15 does not. Pick one, save money-15 year, get flexibility-30 year.

positive: Why won't anyone just answer the original question? The question was not about opportunity cost or flexibility or family expenses. There are no right answers to any of those things and they all depend on individual circumstances. I believe the answer to the question of whether paying off a 30-year mortgage in 15 years would cost the same amount as a 15-year mortgage of the same interest rate is yes but ONLY if you pay it off on the exact same schedule as your supposed 15-year. In reality, the answer is NO for two reasons: the amortization schedule; and the fact that the 30-year will always have a higher interest rate than the 15-year. The way mortgages are amortized, the interest is paid first, essentially. For most people the majority of the monthly payment is interest for the first half of the loan's life. This is good for most people because, in reality, most mortgages only last a couple years after which people refinance or move and for those first couple years the majority of one's housing costs (interest) are tax deductible. It is arguable whether perpetuating this for one's entire life is wise... but that's the reality of most mortgages. So, unless you pay off your 30-year on the exact same amortization schedule of your theoretical 15-year, you will pay more in interest. A common strategy people pursue is paying an extra monthly payment (or more) each year. By the time you get around to chipping away at your principal in that way, you will already have paid a lot more interest than you would have on a 15-year. And, really, if you can afford to substantially pay down principal in the first year or two of your mortgage, you probably should've borrowed less money to begin with. In theory, IF the rates were the same (they're not) and IF you paid the 30 off every month in the EXACT same way as you would've paid a 15 (you won't) you will pay the same amount in the end. You have to decide if the flexibility is worth more to you than the cost savings.  For example: a 300k mortgage at 3.5% will have a monthly payment of ~$2150 for a 15-year and ~$1350 for a 30-year, both will start with ~$875/month of that being in interest (gradually declining with time). What I think most people undervalue is the freedom and peace of mind that comes with a paid off or nearly paid off home... and 15 years is a lot more tangible than 30, plus a lot cheaper over all. If you can afford a 15-year mortgage without putting too much stress on your budget, it is definitely the better option for financial security.  And be careful of the index fund opportunity cost advice. On average it may be a good idea when you look at the very long run, historically, but a lot of people get less than average returns depending on when they buy and what the market does in the short run. There is no certainty around what returns you will get from the stock market, but if you have a 30-year mortgage there is a lot of certainty around what you will owe every month for the next 30-years. Different mixes of investments make sense for different people, and most people would be wise to get some exposure to the stock market for its returns and liquidity. However, if someone's goal is borrowing more money for their house in order to invest more money in the stock market for their retirement, they would actually be better served in achieving security and independence 15 years sooner.

negative: "I can just get the exact same mortgage in a 30-year version, and just pay it off within whatever year window I choose This is an assumption which often does not come true. The ""advantage"" of a 15 year mortgage is you hopefully never decide you want more toys or to go out to eat and suddenly your mortgage takes 30 years to pay off instead of 15. Plus, if I get a 30-year mortgage then I have a cushion in case I run into major financial hardship. That same cushion can turn into other luxuries. Maybe you want new furniture. ""I won't pay extra on the mortgage this year."" Suddenly it's year 22. This is not a 100% guarantee by any means, but it is something which is relatively likely. Yet everywhere I look I see people online going on about how unwise 30-year mortgages are I read a lot of online financial resources and almost never see this claim."

negative: I realize this question is a few years old now, but I wanted to address one of the OP's questions that hadn't been answered yet (my answer is framed as though the question were recent): However, on the plus side, the monthly payment would likely be $200 less/mo with this house vs our current rent. On a 30 year mortgage it would be almost $3-400 less. This makes me think that I could use the difference to pay directly toward the principal each month. Is my logic sound? The way amortization works, if the interest rate between 30 and 15 were the same, then making principal-only prepayments on the 30 year to cover the difference in monthly payments would result in the exactly the same schedule as if you did minimum payments on the 15-year - i.e. the numbers would be practically indistinguishable.  Of course, in practice the interest rate is slightly better on the 15-year, which makes the 30-year with prepayments compare slightly less favorably. If you're confident that you'll be able to reliably keep up with the monthly payments, the 15-year would minimize the total amount of interest you pay, and help you get off of PMI slightly faster.  But the 30-year w/ prepayments gives you the option to skip a prepayment or two if you run into any financial difficulty, which is a nice option to have.  But you do have to be disciplined about making the prepayments every month.

negative: "This doesn't say the whole story (like the length of the HELOC). if you have 15 years left on a mortgage and ""refinance"" into a 30 year HELOC then yes, your payments maybe 20% lower, but you add 15 years to pay it off.  Just remember that interest occurs daily on what you owe. If you move 100K of debt from 5% mortgage to 6% HELOC you'll be paying more to the banks no matter how you slice it."

negative: There's several different trade-offs wrapped up in your question. In general, refinancing a mortgage to a lower interest rate makes sense if you are certain you'll be living in the house for N years.  N depends on your closing costs and points.  Basically you need to calculate the break-even point for when the savings from the reduced interest rate exceeds the cost of the re-fi.  When I refinanced, the broker did the calculations for me for a range of options, maybe yours could as well. The trade off in selecting 30-year vs. 15-year is between monthly payment and total outlay.  A 15-year mortgage will have a higher monthly payment, but the total money that is paid out the bank (rather than to your equity) will be less. Using the Heloc to do the down payment seems sketchy; plus then you have two loan payments you're making each month.  Why not keep it simple and look for a $250k loan with 5% down?  Presumably with the current mortgage you already put in a good down payment, and have built some equity up.

negative: "So, let's take a mortgage loan that allows prepayment without penalty. Say I have a 30 year mortgage and I have paid it for 15 years. By the 16th year almost all the interest on the 30 year loan has been paid to the bank This is incorrect thinking.  On a 30 year loan, at year 15 about 2/3's of the total interest to be paid has been paid, and the principal is about 1/3 lower than the original loan amount.  You may want to play with some amortization calculators that are freely available to see this in action.   If you were to pay off the balance, at that point, you would avoid paying the remaining 1/3 of interest.   Consider a 100K 30 year mortgage at 4.5% In month two the payment breaks down with $132 going to principal, and $374 going to interest.  If, in month one, you had an extra $132 and directed it to principal, you would save $374 in interest.  That is a great ROI and why it is wonderful to get out of debt as soon as possible.   The trouble with this is of course, is that most people can barely afford the mortgage payment when it is new so lets look at the same situation in year 15. Here, $271 would go to principal, and $235 to interest.  So you would have to come up with more money to save less interest.  It is still a great ROI, but less dramatic.   If you understand the ""magic"" of compounding interest, then you can understand loans.  It is just compounding interest in reverse.  It works against you."

negative: The breakdown between how much of your payment is going toward principal and interest is very important.   The principal balance remaining on your loan is the payoff amount.  Once the principal is paid off, your loan is finished.  Each month, some of your payment goes to pay off the principal, and some goes to pay interest (profit for the bank). Using your example image, let's say that you've just taken out a $300k mortgage at 5% interest for 30 years.  You can click here to see the amortization schedule on that loan.  The monthly payment is $1610.46. On your first payment, only $360 went to pay off your principal.  The rest ($1250) went to interest.  That money is lost.  If you were to pay off your $300k mortgage after making one payment, it would cost you $299,640, even though you had just made a payment of $1250.  Interest accrues on the principal balance, so as time goes on and more of the principal has been paid, the interest payment is less, meaning that more of your monthly payment can go toward the principal.   15 years into your 30-year mortgage, your monthly payment is paying $762 of your principal, and only $849 is going toward interest.  Your principal balance at that time would be about $203k.  Even though you are halfway done with your mortgage in terms of time, you've only paid off about a third of your house. Toward the end of your mortgage, when your principal balance is very low, almost all of your payment goes toward principal.  In the last year, only $513 of your payments goes toward interest for the whole year. You can think of your monthly loan payment as a minimum payment.  If you continue to make the regular monthly payments, your mortgage will be paid off in 30 years.  However, if you pay more than that, your mortgage will be paid off much sooner.  The extra that you pay above your regular monthly payment all goes toward principal. Even if you have no plans to pay your mortgage ahead of schedule, there are other situations where the principal balance matters.  The principal balance of your mortgage affects the amount of equity that you have in your home, which is important if you sell the house.  If you decide to refinance your mortgage, the principal balance is the amount that will need to be paid off by the new loan to close the old loan.

negative: Lets do the math, using your numbers. We start off with $100K, a desire to buy a house and invest, and 30 years to do it.  Scenario #1 We buy a house for $100K mortgage at 5% interest over 30 years. Monthly payment ends up being $536.82/month. We then take the $100K we still have and invest it in stocks, earning an average of 9% annually and paying 15% taxes.  Scenario #2 We buy a house for our $100K cash, and then, every month, we invest the $536.82 we would have paid for the mortgage. Again, investments make 9% annually long term, and we pay 15% taxes.  How would it look in 30 years?  Scenario #1 Results: 30 years later we would have a paid off house and $912,895 in investments Scenario #2 Results: 30 years later we would have a paid off house and $712,745 in investments Conclusion: NOT paying off your mortgage early results in an additional $200,120 in networth after 30 years. That's 28% more. Therefore, not paying off your mortgage is the superior scenario.  Caveats/Notes/Things to consider Play with the numbers yourself:

negative: Can I pay $12,000 extra once a year or $1000 every month - which option is better? Depends when. If you mean 12K now vs 1K a month over the next 12 months, repeating this each year, now wins. If you mean saving 1K a month for 12 months then doing a lumpsum, the 1K a month wins. Basically, a sooner payment saves you more money than a later payment. The first option does sound better, but for a 30 year mortgage, is it that significant? Your number one issue is that you have a thirty year mortgage. The interest you pay on it is monstrous. For the 30 year term, you pay around 500K in interest. A 15-year mortgage is 300K cheaper (only 200K in interest will be paid). The monthly payment would be 1250 more. How much money and years on a mortgage can I save? When is the best time to pay? At the end of each year? You can knock off about a dozen years. Save I think ~250K. You can find mortgage calculators online or talk to your mortgage advisor to play around with the numbers.

negative: At this time there is one advantage of having a 30 year loan right now over a 15 year loan.  The down side is you will be paying 1% higher interest rate. So the question is can you beat 1% on the money you save every month. So Lets say instead of going with 15 year mortgage I get a 30 and put the $200 monthly difference in lets say the DIA fund.  Will I make more on that money than the interest I am losing?  My answer is probably yes.  Plus lets factor in inflation.  If we have any high inflation for a few years in the middle of that 30 not only with the true value of what you owe go down but the interest you can make in the bank could be higher than the 4% you are paying for your 30 year loan.   Just a risk reward thing I think more people should consider.

negative: You mentioned 15-20 years in your comment on mhoran_psprep's response. This is the most important factor to consider in the points vs. rate question. With a horizon that long it sounds like the points are probably a better option for you. There is a neat comparison tool at The Mortgage Professor's website that may help you build your spreadsheet or simply check the numbers you are getting.

negative: If you're truly ready to pay an extra $1000 every month, and are confident you'll likely always be able to, you should refinance to a 15 year mortgage. 15 year mortgages are typically sold at around a half a point lower interest rates, meaning that instead of your 4.375% APR, you'll get something like 3.875% APR.  That's a lot of money over the course of the mortgage.  You'll end up paying around a thousand a month more - so, exactly what you're thinking of doing - and not only save money from that earlier payment, but also have a lower interest rate.  That 0.5% means something like $25k less over the life of the mortgage.  It's also the difference in about $130 or so a month in your required payment. Now of course you'll be locked into making that larger payment - so the difference between what you're suggesting and this is that you're paying an extra $25k in exchange for the ability to pay it off more slowly (in which case you'd also pay more interest, obviously, but in the best case scenario).  In the 15 year scenario you must make those ~$4000 payments.  In the 30 year scenario you can pay ~$2900 for a while if you lose your job or want to go on vacation or ... whatever. Of course, the reverse is also true: you'll have to make the payments, so you will.  Many people find enforced savings to be a good strategy (myself among them); I have a 15 year mortgage and am happy that I have to make the higher payment, because it means I can't spend that extra money frivolously. So what I'd do if I were you is shop around for a 15 year refi.  It'll cost a few grand, so don't take one unless you can save at least half a point, but if you can, do.

negative: There's a ton of great advice here.  It's very challenging to come up with something that hasn't already been suggested.  I'm curious to know how many years you have left to pay down the mortgage at the regular rate of payment.  If it's more than 15 years, it might be worthwhile to consider refinancing your mortgage to a shorter term (15 years or even 10 years if your income supports it).  Rates on fixed-interest mortgages at those terms are down in the 3% range and lower (at least according to bankrate.com).  Refinancing to a shorter term would be another way of paying off your home faster (with fewer of those dollars going toward interest payments). If you've got fewer than 15 years left to pay off your mortgage, following any of the other advice you've received here should keep you in great financial shape.

negative: In general, it makes sense to go for the 15 year fixed if you can afford it, as you'll pay down far more principal than if you go for a 30 year. Take a peek at the amortization tables for two loans, keeping in mind that the average American lives in a house for 7 years.

negative: 30 year loans usually have higher interest rates. You pay more interest over the life of the loan on a 30 year loan A 15 year loan will have higher monthly payments than a 30 year loan 30 year loans are virtually all fixed interest rate loans. 10 year loans often are variable interest rates.

negative: The best way to look at it is this: I would suspect most people would say no.  Most people do not have the time, skill, or risk tolerance to be able to leverage capital as large as the value of their own home. Remember that a 15-year fixed has a slightly lower interest rate than a 30-year fixed (difference of 0.5–1%).  If you won't have the discipline to invest every cent left in your pocket, then you are better off with the 15-year and the lower rate.

negative: The monthly payment difference isn't that great On a $300K loan, the 30 year monthly payment (at 4%) is $1432, the 15 year (at 3.5%) is $2145, that $712 per month, or 50% higher payment. $712 is the total utility or food bill for a couple. If that $1432 represents 25% of income (a reasonable number) then $2145 is over 35%. I'd rather use that money for something else and not obligate myself at the start of the mortgage.  Given how little we save as a country, the $712 is best put into a matched 401(k) in the US or other retirement account if elsewhere.

negative: I concur that you should probably go with option 1.  And that is coming from a guy that refinanced all three of his properties with down to 20% equity 3 years ago to lock in either 4% 30 year fixed or 2.75% 15 year mortgage.  And I will not pay them off early because I do think I can do better than that in the market even if inflation is 0% for the next 30 years.  Just imagine when the fed stops manipulating tax rates.  I could be making more than 4% just in a checking account.

negative: There is no simple way to calculate how much house any given person can afford. In the answer keshlam gave, several handy rules of thumb are mentioned that are used as common screening devices to reject loans, but in every case further review is required to approve any loan.  The 28% rule is the gold standard for estimating how much you can afford, but it is only an estimate; all the details (that you don't want to provide) are required to give you anything better than an estimate. In the spirit of JoeTaxpayer's answer I'm going to give you a number that you can multiply your gross income by for a good estimate, but my estimate is based on a 15 year mortgage. Assuming a 15 year mortgage with a 3% interest rate, it will cost $690.58 per $100,000 borrowed. So to take those numbers and wrap it up in a bow, you can multiply your income by 3.38 and have the amount of mortgage that most people can afford. If you have a down-payment saved add it to the number above for the total price of the home you can buy after closing costs are added in. Property taxes and insurance rates vary widely, and those are often rolled into the mortgage payment to be paid from an escrow account, banks may consider all of these factors in their calculators but they may not be transparent. If you can't afford to pay it in 15 years, you really can't afford it. Compare the same $100k loan: In 30 years at 4% you pay about $477/month with a total of about $72k in interest over the life of the loan. In 15 years at 3% you pay about $691/month but the total interest is only $24k, and you are out of the loan in half of the time. The equity earned in the first 5 years is also signficantly different with 28.5% for the 15 year loan vs. 9.5% on the 30 year loan.  Without straying too far into general economics, 15 year loans would also have averted the mortgage crisis of 2008, because more people would have had enough equity that they wouldn't have walked out on their homes when there was a price correction.

negative: There is another factor to consider when refinancing is the remaining term left on your loan.  If you have 20 years left, and you re-fi into another 30 year loan that extends the length that you will be paying off the house for another 10 years.  You are probably better off going with 20, or even 15.  If this is a new loan, that is less of an issue, although if you moving and buying a house in a similar price range it is still something to consider.  My goal is to have my house paid off before I retire (hopefully early semi-retirement around 55).

negative: Think of your mortgage this way - you have a $130K 16 year mortgage, at 6.75%.  At 4%, the same payment ($1109 or so) will pay off the loan in 12.4 years. So, I agree with littleadv, go for a 15yr fixed (but still make the higher payment) or 10 yr if you don't mind the required higher payment. Either way, a refinance is the way to go.  Edit - My local bank is offering me a 3.5% 15 yr loan with fees totaling $2500. For the OP here, a savings of 3.25% or first year interest savings of $4225. 7 months to breakeven.  It's important not to get caught up in trying to calculate savings 15-20 years out. What counts today is the rate difference and looking at it over the next 12 months is a start. If you break even to closing costs so soon, that's enough to make the decision.

negative: "I haven't heard 30-year mortgages called unwise. As @jared said, the shorter terms often will be cheaper if you are going to pay off within that term anyway, but the extra cost of the 30 may still be justified because it gives you the ""safety net"" of being able to fall back to the lower payment if money gets tight. Cheap insurance if you might need that insurance. That wasn't something I was worried about, so I took a 20-year, later refinanced as 15-year, and got a slightly better rate by doing so. Consider how long you expect to own this house, and shop for the best deal you can find. Remember to figure points into the real cost the loan. There are calculators on many bank/credit-union websites that can help you do this comparison."

negative: "For the mortgage, you're confusing cause and effect. Loans like mortgages generally have a very simple principle behind them: at any given time, the interest charged at that time is the product of the amount still owing and the interest rate. So for example on a mortgage of $100,000, at an interest rate of 5%, the interest charged for the first year would be $5,000. If you pay the interest plus another $20,000 after the first year, then in the second year the interest charge would be $4,000. This view is a bit of an over-simplification, but it gets the basic point across. [In practice you would actually make payments through the year so the actual balance that interest is charged on would vary. Different mortgages would also treat compounding slightly differently, e.g. the interest might be added to the mortgage balance daily or monthly.] So, it's natural that the interest charged on a mortgage reduces year-by-year as you pay off some of the mortgage. Mortgages are typically setup to have constant payments over the life of the mortgage (an ""amortisation schedule""), calculated so that by the end of the planned mortgage term, you'll have paid off all of the principal. It's a straightforward effect of the way that interest works in general that these schedules incorporate higher interest payments early on in the mortgage, because that's the time when you owe more money. If you go for a 15-year mortgage, each payment will involve you paying off significantly more principal each time than with a 30-year mortgage for the same balance - because with a 15-year mortgage, you need to hit 0 after 15 years, not 30. So since you pay off the principal faster, you naturally pay less interest even when you just compare the first 15 years. In your case what you're talking about is paying off the mortgage using the 30-year payments for the first 15 years, and then suddenly paying off the remaining principal with a lump sum. But when you do that, overall you're still paying off principal later than if it had been a 15-year mortgage to begin with, so you should be charged more interest, because what you've done is not the same as having a 15-year mortgage. You still will save the rest of the interest on the remaining 15 years of the term, unless there are pre-payment penalties. For the car loan I'm not sure what is happening. Perhaps it's the same situation and you just misunderstood how it was explained. Or maybe it's setup with significant pre-payment penalties so you genuinely don't save anything by paying early."

negative: Putting debt out long is getting a longer term while interest rates are low.  For example, taking out a 30 year mortgage instead of a 15 because we are at low rates for mortgages and you are unlikely to get this good of a rate in 10 years.

negative: The biggest factor is: Are you really going to invest the difference? It is easy to say you will now, but unless you have a ton of discipline or some form of automatic investing, that is a hard thing to do in practice. Another consideration is that the 30 year loan will usually cost you more over the life of the loan because of the length of it.  Another option is to take the 30 year loan and pay at the rate you would with a 15. Then you get the benefit of paying it down quickly, but have the flexibility to only make smaller than usual payments in any month where you have a financial emergency and need the extra cash.

negative: If the best they can do is 1/8th of a percent for a 15 year term, you are best served by taking the 30 year term. Pay it down sooner if you can, but it's nice to have the flexibility if you have a month where things are tight.

negative: By rounding my house payments up to the nearest $50.00, my 30 year mortgage was paid off in 7 years.  Initially, my mortgage payment was roughly $600, $50 going to principal and $550 going to interest (banker's profits). By paying $650, I was actually doubling the amount I was paying on principal.  Since interest is computed as a function (percentage) of the outstanding principal balance, the amount of my fixed payment that went to interest decreased each month, and the amount that went to principal increased. In 7 years I owned my home free and clear, and started putting the money I had been putting into the mortgage payments into investments. A rule of thumb I have discovered is that it takes half the time to save money to meet a goal that it takes to pay off the same debt.

negative: Mortgages with a prepayment penalty usually do not charge points as a condition of issue. The points, usually in the range 1%-3% of the amount borrowed, are paid from the buyer's funds at the settlement, and are effectively the prepayment penalty.  Once upon a time (e.g. 30 years ago), in some areas,  buyers had a choice of  This last option usually had a higher interest rate than the first two. It was advantageous for a buyer to accept this option if the buyer was sure that the mortgage would indeed be paid off in a short time, e.g. because a windfall of some kind (huge bonus, big inheritance, a killing in the stock market, a successful IPO) was anticipated, where the higher interest charged for only a few years did not make much of a difference. Taking this third option and hanging on to the mortgage over the full 15 or 20 or 25 or 30 year term would have been a very poor choice. I do not know if all three options are still available in the current mortgage market. The IRS treats points for original morttgages and points for re-financed mortgages differently for the purposes of Schedule A deductions. Points paid on an original mortgage are deductible as mortgage interest in the year paid, whereas points paid on a refinance must be amortized over the life of the loan so that the mortgage interest deduction is the sum of the interest paid in the monthly payments plus a fraction of the points paid for the refinance. The undeducted part of the points get deducted in the year that the mortgage is paid off early (or refinanced again). Prepayment penalties are, of course, deductible as mortgage interest in the year of the prepayment.

negative: "Why do banks charge a significantly lesser rate for a 15 yr. fixed mortgage than a 30yr. (though they know it will not earn them the same amount of money)?  A simplistic model of where banks get the money to lend to borrowers is that they ""borrow"" money from investors that want to earn a return on the money that they provide.  The actual mechanics of that process are much more complicated, but the gist is that if those investors want to tie their money up for a longer period, they expect to get a higher return, thus 30-year mortgages require a higher interest rate than 15-year mortgages.  In addition, the ""usual"" consensus in the market is that interest rates will rise in the future, so interest rates for longer-term loans are higher  While it's true that the bank gets ""more money"" overall from a higher-rate mortgage, the fact that that additional money doesn't come until several years into the loan (and that money loses value over time due to inflation) makes a lower-rate 15 year mortgage roughly equivalent to a higher-rate 30-year mortgage."

negative: So I will attempt to answer the other half of the question since people have given good feedback on the mortgage costs of your various options. Assumptions:   It is certain that I am off on some (or all) of these assumptions, but they are still useful for drawing a comparison.   If you were to make your mortgage payment, then contribute whatever you have left over to savings, this is where you would be at the end of 30 years. Wait, so the 30 year mortgage has me contributing $40k less to savings over the life of the loan, but comes out with a $20k higher balance?  Yes, because of the way compounding interest works getting more money in there faster plays in your favor, but only as long as your savings venue is earning at a higher rate than the cost of the debt your are contrasting it with. If we were to drop the yield on your savings to 3%, then the 30yr would net you $264593, while the 15yr ends up with $283309 in the bank.  Similarly, if we were to increase the savings yield to 10% (not unheard of for a strong mutual fund), the 30yr nets $993418, while the 15yr comes out at $684448.  Yes in all cases, you pay more to the bank on a 30yr mortgage, but as long as you have a decent investment portfolio, and are making the associated contributions, your end savings come out ahead over the time period.  Which sounds like it is the more important item in your overall picture. However, just to reiterate, the key to making this work is that you have an investment portfolio that out performs the interest on the loan.  Rule of thumb is if the debt is costing you more than the investment will reliably earn, pay the debt off first.  In reality, you need your investments to out perform the interest on your debt + inflation to stay ahead overall.  Personally, I would be looking for at least an 8% annual return on your investments, and go with the 30 year option. DISCLAIMER: All investments involve risk and there is no guarantee of making any given earnings target.

negative: "I'm in the ""big mortgage"" camp. Or, to put this another way - what would you be happier to have in 15 years? A house that is worth $300,000, or $50,000 of equity in a house and $225,000 in the bank? I would much rather have the latter; it gives me so many more options.  (the numbers are rough; you can figure it out yourself based on the current interest rate you can get on investments vs the cost of mortgage interest (which may be less if you can deduct the mortgage interest))."

negative: Have you looked at conventional financing rather than VA?  VA loans are not a great deal.  Conventional tends to be the best, and FHA being better than VA.  While your rate looks very competitive, it looks like there will be a .5% fee for a refinance on top of other closing costs.   If I have the numbers correct, you are looking to finance about 120K, and the house is worth about 140K.  Given your salary and equity, you should have no problem getting a conventional loan assuming good enough credit.   While the 30 year is tempting, the thing I hate about it is that you will be 78 when the home is paid off.  Are you intending on working that long?  Also you are restarting the clock on your mortgage.  Presumably you have paid on it for a number of years, and now you will start that long journey over. If you were to take the 15 year how much would go to retirement?  You claim that the $320 in savings will go toward retirement if you take the 30 year, but could you save any if you took the 15 year? All in all I would rate your plan a B-.  It is a plan that will allow you to retire with dignity, and is not based on crazy assumptions.  Your success comes in the execution.  Will you actually put the $320 into retirement, or will the needs of the kids come before that?  A strict budget is really a key component with a stay at home spouse. The A+ plan would be to get the 15 year, and put about $650 toward retirement each month.  Its tough to do, but what sacrifices can you make to get there?  Can you move your plan a bit closer to the ideal plan? One thing you have not addressed is how you will handle college for the kids.  While in the process of long term planning, you might want to get on the same page with your wife on what you will offer the kids for help with college.  A viable plan is to pay their room and board, have them work, and for them to pay their own tuition to community college.  They are responsible for their own spending money and transportation.   Thank you for your service.

negative: Risk. A shorter-term mortgage is less risky than a long-term mortgage - in this case there's half the chance of something bad happening because there's half the time allotted (15 vs 30 years). Bad things include you going bankrupt, massive inflation, or your home being destroyed in a meteor impact that your insurer won't cover. They entice consumers to these less risky mortgages by offering a lower interest rate.


query: How can I withdraw money from my LLC?

positive: Generally, unless you explicitly elect otherwise, LLCs are transparent when it comes to taxes. So the money in the LLC is your money for tax purposes, there's no need to pay yourself a salary. In fact, the concept of salary for LLC members doesn't exist at all. It is either distributions or guaranteed payments (and even that is mostly relevant to multi-member LLCs). The only concern is the separation of personal and LLC finances - avoiding commingling. Mixing your personal and business expenses by using the same accounts/cards for both business and personal spending may cause troubles when it comes to the liability protection in case of a lawsuit. I'd suggest discussing this with a FL-licensed attorney. Bottom line - technically the withdrawal is just writing yourself a check from the business account or moving money between your personal and business accounts. If you're a sole member - you need not more than that. Make sure the operating agreement explicitly empowers you to do that, of course. There are no tax consequences, but as I mentioned - there may be legal consequences.

positive: "What you're asking about is called a ""distribution"" when it comes to an LLC.  It's basically you paying yourself some or all of the proceeds of the business, depending on how you're set up.  You can pay yourself distributions on a regular schedule, say monthly, or you can do it at the end of the year. Whatever you do in this regard, what you take out as distributions is reported on your personal income tax as taxable income.  LLCs in the U.S. use pass-through taxation (unless you intentionally elect to have the LLC treated as a corporation for tax purposes, which some people do), so whatever the principals receive in distribution is personally taxable. Keep in mind that you'll have to pay ALL of the taxes normally covered by an employer, such as self-employment tax (usually about 15%), social security tax, and so on.  This is in addition to income tax, so remember that. I hope this helps. Good luck!"

positive: "There are TWO parts to an LLC or any company structure.  This being the entire point of creating an LLC.  The context is that a lawyer is after your LLC, and he's arguing that the LLC is not genuine, so he can go after your personal assets - your house, car, IRAs, tap your wife's salary etc.  This is called ""piercing the corporate veil"".  What would he use to claim the LLC is not genuine?  The determination here is between you and the judge in a lawsuit.  Suffice it to say, the way you withdraw money must consider the above issues, or you risk breaking the liability shield and becoming personally liable, which means you've been wasting the $25 every year to keep it registered.  The IRS has a word for single member LLCs: ""Disregarded entity"".  The IRS wants to know that the entity exists and it's connected to you.  But for reporting tax numbers, they simply want the LLC's numbers folded into your personal numbers, because you are the same entity for tax purposes. The determination here is made by you.  *LLCs are incredible versatile structures, and you can actually choose to have it taxed like a corporation where it is a separate ""person"" which files its own tax return. * The IRS doesn't care how you move money from the LLC to yourself, since it's all the same to them.  The upshot is that while your own lawyer prohibits you from thinking of the assets as ""all one big pile"", IRS requires you to. Yes, it's enough to give you whiplash."

negative: How do I withdraw a large sum from my bank and give it to a money management firm? Either write a check to the Money Management firm or wire transfer the funds to the account mentioned.

negative: From personal experience, I can tell you that bank account numbers are not unique.  Someone from another branch of my bank was able to withdraw money from my account at my branch because they had the same account number.  You are supposed to enter your branch number on the withdrawal slip in front of your account number.  The person who got my money did not do this.  Because it was at my branch, the teller debited my account for the transaction.  I caught this on my monthly statement and immediately complained to my branch manager. He was able to retrieve the withdrawal slip and saw what had happened.  He credited my account and said he was going to talk to the teller who should have asked for the branch number and/or should have noticed that the name and address on the withdrawal slip did not match those on my account.  I would not have thought that the bank would allow this situation considering how many numbers are available to assign but they did.

negative: "One thing I would add to TTT's answer: One of the benefits of using an LLC for your business is right there in the name - ""limited liability"". It provides a level of protection for your personal assets should your business go bankrupt, get sued, and so forth. However, if someone can show that there's no real separation between your LLC's activities and your personal activities, then they can ""pierce the corporate veil"" and go after your personal assets. If this loan is really purely personal and not related to your business activities, you may create a paper trail that can later be used in this way. My advice would be to just avoid the whole thing and make the loan from personal funds. I don't see any upside to doing this out of the LLC funds."

negative: I did some empirical research, comparing the exchange rates for wire transfers vs. the exchange rates for ATM withdrawals. With my bank, wire transfers typically take a 4% float off the exchange rate. ATM withdrawals seem to take just over 2%. And ATM withdrawals don't have a wire transfer fee, as long as I'm withdrawing from a branch of the same bank (overseas). The only problem with ATM withdrawals is the daily limit. As far as I can see, Tor's answer above has it completely backwards, at least with my bank, ATM withdrawals are a much better value. Do the research yourself...call the bank you're going to transfer from and find out what their current exchange rate is. Compare it to the current spot rate (e.g. XE.com) to determine how much of a cut the bank is taking. Then, if you can, withdraw some cash from the foreign location with your ATM card and see how much of the original currency is deducted from your account. In this way you can empirically discover for yourself the better rate.

negative: The thing you get wrong is that you think the LLC doesn't pay taxes on gains when it sells assets.  It does. In fact, in many countries LLC are considered separate entities for tax properties and you have double taxation - the LLC pays its own taxes, and then when you withdraw the money from the LLC to your own account (i.e.: take dividends) - you pay income tax on the withdrawal again. Corporate entities usually do not have preferential tax treatment for investments. In the US, LLC is a pass-though entity (unless explicitly chosen to be taxed as a corporation, and then the above scenario happens). Pass-through entities (LLCs and partnerships) don't pay taxes, but instead report the gains to the owners, which then pay taxes as if the transaction was their personal one. So if you're in the US - investing under LLC would have no effect whatsoever on your taxes, or adverse effect if you chose to treat it as a corporation. In any case, investing in stocks is not a deductible expense, and as such doesn't reduce profits.

negative: "You can file an LLC yourself in most states, although it might be helpful to use a service if you're not sure what to do to ensure it is correct.  I filed my LLC here in Colorado online with the Secretary of State's office, which provided the fill-in-the-blank forms and made it easy. In the U.S., taxation of an LLC is ""pass-through"", meaning the LLC itself does not have any tax liability.  Taxes are based on what you take out of the LLC as distributions to yourself, so you pay personal income tax on that. There are many good books on how to form and then operate an LLC, and I personally like NoLo (link to their web site) because they cater to novices. As for hiring people in India, I can't speak to that, so hopefully someone else can answer that specific topic. As for what you need to know about how to run it, I'll refer back to the NoLo books and web site."

negative: Paypal does it differently in different countries, depending on how the system in that country works. That is why it is not a service that is available everywhere - rules and systems differ. In the US it is done through the ACH system (US internal inter-bank transfer system). It is the same system used to process checks. I know that in several countries, PayPal deposits/withdraws money through credit cards (it is not possible in the US to the best of my knowledge). In the US we can withdraw money from PayPal by check or ACH transfer to the bank (or by using their own debit card).

negative: How to send the full loan amount from Saudi Arabia (money exchange), because I have a money transfer limit? There is no limit for sending money into India. Just use the right banking channel and transfer the funds. If I sent to India, what about tax and all that in India? In a financial year if you are outside of India for more than 182 days, you are Non-Resident for tax purposes. Any money you earn outside of India is tax free in India. i.e. there is no tax for this funds in India.   If it is possible to send the money, to whom do I have to send it (my account, or my parents account) Whatever is convenient, preferably to your own NRE/NRO account. Any documents I have to show for tax issues (in case tax) You have to establish that you are NRI and hence this funds are not taxable. Hence its best you transfer into NRE/NRO account. If you transfer to your parents account, you would need a gift deed to make this non-taxable to your parents. I have savings account my self in Axis Bank, for the past 3 years I am paying taxes, if I send to my Axis Bank account how can I withdraw the full amount (10 lakhs (1,000,000)) on single day   Withdrawal is possible by cash or cheque You can write a check, do a NEFT/RTGS transfer to your loan account, you can withdraw cash by giving some notice time to the Branch Manager of your Branch.

negative: Assuming you are NRI, any income you earn is not taxable in India whether you transfer to India or not. Is this amount taxable in India? If yes then how much I have to pay as tax. No it is not taxable. How to fixed Deposit this money from Saudi Arabia or from India through my husband or parents? You can open Fixed Deposits in your name or your husband/parents name. It is your choice. Some Banks allow you to operate an NRE account via Internet If I put this money in 2-3 FD's (like 5 lakh one FD and 2 or 3 lakh other FD's) then the interest earned is taxable? Interest is taxable.  Can I withdraw any FD without maturity if needed in urgent? That depends on type of FD you have opened. Some allow withdrawal before maturity with a penalty other don't allow.

negative: There is a whole pile of information on TFSAs here. I recommend reading it. There is no penalty for withdrawing money from a TFSA as such. You can withdraw from it at any time. The only restriction is that you can't put the money you took out back in the same year (unless you have sufficient contribution room for it to be considered an additional contribution). This scenario explains it. There may be penalties for withdrawing money from the investment vehicle into which you paid the TFSA contents. For example your TFSA contents may be in a mutual fund, or in an interest-bearing savings account. If those have restrictions on how much you can withdraw, or have penalties for withdrawl, then you will have to abide by the rules and pay any penalties.

negative: I have a very similar situation doing side IT projects.  I set up an LLC for the business, created a separate bank account, and track things separately.  I then pay myself from the LLC bank account based on my hours for the consulting job.  (I keep a percentage in the LLC account to pay for expenses.)  I used to do my taxes myself, but when I created this arrangement, I started having an accountant do them.  An LLC will not affect your tax status, but it will protect you from liability and make things more accountable come tax time.

negative: "I think you can do it as long as those money don't come from illegal activities (money laundering, etc). The only taxes you should pay are on the interest generated by those money while sitting in the UK bank account. Since I suppose you already paid taxes on those money in Greece while you were earning those money. About being audited, in my own experience banks don't ask you much where your money are coming from when you bring money to them, they are very willing to help, and happy. (It's a differnte story when you ask to borrow money). When I opened a bank account in US I did not even have an SSN, but they didn't care much they just took my passport and used the passport number for registering the account. Obviously on the interest generated by the money in the US bank account I had to pay taxes, but it was easy because I simply let the IRS via the bank to withdarw the 27% on the interest generated (not on the capital deposited). I didn't put a huge amount of money there I had to live there for 1 year or some more. Maybe if i deposited a huge amount of money someone would have come to ask me how did I make all those money, but those money were legally generated by me working in Italy before so I didn't have anything to be afraid about. BTW: in Italy I was thinking to move money to a German bank in Germany. The risk of default is a nightmare, something of completly new now in UE compared to the past where each state had its own currency. According to Muro history says that in case of default it happened that some government prevented people from withdrawing money form bank accounts: ""Yes, historically governments have   shut down banks to prevent people from   withdrawing their money in times of   crisis. See Argentina circa 2001 or US   during Great Depression. The   government prevented people from   withdrawing their money and people   could do nothing while their money   rapidly lost value."" but in case Greece prevents people from withdrwaing money, those money are still in EURO, so i'm wondering what would be the effect. I mean would it be fair that a Greek guy can not withdraw is EURO money whilest an Italian guy can withdraw the same currency money in Italy?!"

negative: "What would be the best strategy to avoid paying income taxes on the   sale after I move to another US state? Leaving the US and terminating your US residency before the sale closes. Otherwise consider checking your home country's tax treaty with the US. In any case, for proper tax planning you should employ a licensed tax adviser - an EA, CPA or an attorney licensed in your State (the one you'd be when the sale closes). No-one else is legally allowed to provide you tax advice on the matter. Because the company abroad is befriended, I have control over when   (and e.g. in how many chunks) the earnings of the sale flow into my   LLC. So I can plan where I live when that money hits my US account. I'm not familiar with the term ""befriended"" in this context, but form what I understand your description - its a shell corporation under your own control. This means that the transfer of money between the corporation and your LLC is of no consequence, you constructively received the money when the corporation got it, not the LLC. Your fundamental misunderstanding is that there's importance to when the money hits your US bank account. This is irrelevant. The US taxes your worldwide income, so it is taxed when you earn it, not when you transfer it into the country (as opposed to some other countries, for example India or the UK). As such, in your current scheme, it seems to me that you're breaking the US tax law. This is my personal impression, of course, get a professional advice from a licensed tax professional as I defined earlier."

negative: "For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up sitting in the cash part of your RRSP account (and you'd probably use the money to buy more stocks, though would not be required to do so). Either way, you do not pay tax on this investment income unless you withdraw it from your RRSP. For example, you invest $10,000 inside your RRSP. You get the tax benefit from doing so. You get dividends of $1,000 (hey, it was a good year), and use these to buy more stock. As the money never left your RRSP account, you are considered to have invested only your initial $10,000. If instead, you withdraw the $1,000 in dividends, you are taxed on $1000 income. TFSA are slightly more complicated. You don't get a tax benefit from your initial contribution, but then do not pay tax when you withdraw from the TFSA. Your investment income is still tax-free, and you are (generally) much more limited in how much you can contribute. For example, you invest $10,000 inside your TFSA. You get dividends of $1,000, and use these to buy more stock. Your total contributions to your TFSA remains at $10,000 as the money never left your account. You could instead withdraw the $1000 from your TFSA and would not pay tax on it. In the next calendar year (or later) after the withdrawal, you could ""repay"" the $1000 you took out without suffering an overcontribution penalty. This makes TFSA an excellent place to park emergency funds, as you can withdraw and subsequently replace the investment while continuing to get the tax benefits on your investment income. RRSPs are better for retirement or for the home buyers plan. In general, you should not be withdrawing money from either your TFSA or RRSP, except in emergencies, when retiring, or when purchasing a home. I prefer indexed mutual funds or money market accounts for both my RRSP and TFSA rather than individual stocks, but that's up to you."

negative: "Assuming you are talking about an LLC in the United States, there are no tax repercussions on the LLC itself, because LLCs use pass-through taxation in the U.S., meaning that the LLC does not pay taxes. Whatever you take out of the LLC in the form of distributions goes onto your personal income tax as ordinary income, and you pay personal income tax on it.  See this link on the subject from the Nolo.com web site: Tax treatment of an LLC from the Nolo.com web site Repayment of your loan by the LLC would just be another business expense for the business itself.  I guess the question would then turn on what your personal tax repercussion would be for payments received from the LLC on the loan.  I would guess (and I emphasize ""guess"") that you would pay tax on any interest gain from the loan payments, which makes the assumption you made the loan to include interest.  If not (in other words, if you made this an interest-free loan) then it would be considered a wash for tax purposes and you would have no tax liability for yourself. To reiterate, the LLC (if it is a U.S.. entity) does not pay taxes.  Taxation of LLC income is based on whatever distributions the principals take out of it, which is then claimed as taxable personal income. My apologies to littleadv for not making my prior answer (I deleted it) more clear about my answer assuming you were speaking of a U.S.-chartered LLC. I hope this helps. Good luck!"

negative: Can I work on 1099 from my own company instead of on W2? The reason is   on W2 I can't deduct my commute, Health Insurance and some other   expenses while on 1099 I think I can able do that. Since I am going to   client place to work not at my own office, I am not sure whether I   should able to do that or not. If you have LLC, unless you elected to tax it as a corporation, you need neither 1099 nor W2. For tax purposes the LLC is disregarded. So it is, from tax perspective, a sole proprietorship (or partnership, if multiple members). Being a W2 employee of your own LLC is a bad idea. For all these above expenses, which can I use company's debit/credit   card or I need to use only my personal debit/credit card? It would be better to always use a business account for business purposes. Doesn't matter much for tax per se, but will make your life easier in case of an audit or a legal dispute (limited liability protection may depend on it). If I work on 1099, I guess I need to file some reasonable taxes on   quarterly basis instead of filing at year end. If so, how do I pay my   tax on quarterly basis to IRS? I mean which forms should I file and   how to pay tax? Unless you're a W2 employee, you need to do quarterly estimate payments using form 1040-ES. If you are a W2 employee (even for a different job, and even if it is not you, but your spouse with whom you're filing jointly) - you can adjust your/spouse's withholding using form W4 to cover the additional tax liability. This is, IMHO, a better way than paying estimates. There are numerous questions on this, search the site or ask another one for details.

negative: Looks like it is a 20% penalty on the withdrawal (along with income tax).  Funds can be withdrawn for any reason, but withdrawals that are not for documented qualified medical expenses are subject to income taxes and a 20% penalty. The 20% tax penalty is waived for persons who have reached the age of 65 or have become disabled at the time of the withdrawal. Then, only income tax is paid on the withdrawal  Wikipedia HSA article Even though you are leaving the country, you still earned and contributed to the plan while you were working/living, so it is still subject to the taxes/laws in place. On a somewhat related note, check out this question here, as it may help you out a bit (similar but not really duplicate) - How do I withdraw all money from my HSA account as a non-resident?

negative: This would depend on what transfer methods your Forex broker allows. Most will allow you to have a check or wire transfer sent...best thing would be to call/email your broker and ask how to get the money into your account. Keep in mind, many brokers will force you to withdraw using the same funding method you used to deposit, up to the amount of the deposit. For example, if I fund my Forex account with $500 on a credit card and make $500 profit, I now have $1,000 sitting in my Forex account. The broker will force me to withdraw $500 as a credit to my credit card before allowing me to use another withdrawal method. This is an anti-money laundering precaution.

negative: Payment of taxes for your personal return filed with the IRS always come from your personal account, regardless of how the money was earned. Sales tax would be paid from your business account, so would corporate taxes, if those apply; but if you're talking about your tax payments to the IRS for your personal income that should be paid from your personal account. Also, stating the obvious, if you're paying an accountant to handle things you can always ask them for clarification as well. They will have more precise answers. EDIT Adding on for your last part of the question I missed:  In virtually all cases LLC's are what's called a pass through entity.  For these entities, all income in the eyes of the federal government passes directly through the entity to the owners at the end of each year.  They are then taxed personally on this net income at their individual tax rate, that's the very abridged version at least. The LLC pays no taxes directly to the federal government related to your income. Here's a resource if you'd like to learn more about LLC's: http://www.nolo.com/legal-encyclopedia/llc-basics-30163.html

negative: "This is the only question that I see that you didn't answer yourself: Would withdrawing money from the margin account affect how the income is taxed (i.e., is the money taxed only after it is withdrawn)? The answer to this is ""no.""  The tax is the same whether or not you withdraw money from your margin account."

negative: I am from India. I visited US 6-8 times on business VISA and then started 2 Member LLC. Myself and My wife as LLC Members. We provide Online Training to american students from India. Also Got EIN number. Never employed any one. Do i need to pay taxes? Students from USA pays online by Paypal and i am paying taxes in India. Do i need to pay Taxes in US? DO i need to file the Tax returns? Please guide me. I formed LLC in 2010. I opened an Office-taken Virtual office for 75 USD per month to open LLC in 2010. As there is physical virtual address, am i liable for US taxes? All my earning is Online, free lancing.

negative: I would stay away form these.  I have had clients gave real problems when it comes to withdrawing the money...not only do you not have control of the investments themselves, but you also do not have a lot of control when it comes time to withdraw the money.  I have also heard from one client that the fees can be outrageous. There was a securities commission investigation a few years back because a number of salespeople were over-promising. My suggestion would be to find someone independent, with access to a number of different products, who can advise you.

negative: There are lots of reasons why a crook would want you to do this: counterfeit check scam, laundering money, trying to get your account information, getting you used to doing questionable things and then escalating, seeing whether you're the kind of person to go along with bad ideas, etc.  There are not, however, much in the way of good reasons for it. I gather you can withdraw money from your bank without an ATM fee. This I am assuming from the fact that it is being proposed that you withdraw money from your account, and the fact that this is how pretty much all non-predatory banking works. If this person's bank won't let them withdraw money without a fee, something is seriously wrong, and they should get an account at your bank. Do they get charged for using a live teller as well? If not, how is getting money from you easier than getting it from a teller? How much is the fee? If the fee is $2, and you're making $10/hour, that's 12 minutes of wages. Does it take less than 12 minutes to complete this transaction (including the time this other person is spending)? This cartoon comes to mind: https://xkcd.com/951/

negative: "The tax code is a hodgepodge of rules that are often tough to explain.  The reality is that it's our Congress that writes the tax code, and they often have conflicting goals among themselves.  In theory, someone said ""How about we force withdrawals at some point. After all, these are retirement accounts, not 'give your kid a huge inheritance account'."" And the discussion continued from there. The age 70-1/2 was arbitrary. 70 happens to be the age for maximum Social Security benefits. But the average retirement age is 63. To make things more confusing, one can easily start taking IRA or 401(k) withdrawals at age 59-1/2, but for 401(k) as early as 55 if you separate from the job at 55 or later. One can also take withdrawals earlier from an IRA with tax, but no penalty using Sec 72(t) rules (such as 72(t)(2)(A)(iv) on Substantially Equal Periodic Payments).  To add to the confusion, Roth IRA? No RMDs. Roth 401(k), RMDs once separated from service. Since the money has already been taxed, it's the tax on the growth the government loses. My advice to the reader would be to move the Roth 401(k) to a Roth IRA before 70-1/2. My advice to congress would be to change the code to have the same rules for both accounts.  Whether one agrees that a certain rule is 'fair' to them or others is up to them. I think we can agree that the rules are remarkably complex, from origin to execution. And a moving target. You can see just from the history of this site how older questions are often revisited as code changes occur."

negative: "The answer to your question is...it depends.  Depending on the state you, your friend, and the LLC are located in, it can be very easy to run afoul of state banking laws, or to somehow violate some other statute pertaining to the legal activities an LLC may undertake by doing something like a loan. It is not unusual (or illegal) for officers or employees of a business entity to be loaned money by the company they work for, so something of this nature wouldn't be an issue with regulatory agencies.  Having your LLC loan money to a friend who isn't an employee or officer of your LLC just might not be kosher though. The best advice I can give is that you should call the state banking commission or similar agency in your state and ask them whether what you want to do is alright.  The LAST thing you want is to end up with auditors or regulators sniffing around your business, even if you haven't done anything wrong, and you certainly don't want to run the risk of accidentally ""piercing the corporate veil"", as someone else here astutely pointed out. Good luck!"

negative: How about finding a friend with Paypal and sending them the money so they can pay your bill using a card? Withdrawals from Paypal are typically instant now.

negative: The account doesn't have to be associated with a specific health plan. There are some accounts that work that way. In fact, mine does. But I didn't go to a bank and open it up, it came as a package deal with my employer's health plan. Furthermore I don't contribute to it, the company does. If I wish to contribute my own funds, I have a separate Flexible Spending Account (FSA). This is not tied to my health plan. I can make qualified purchases at Wal Mart, Target, or wherever I choose. Then I can submit the receipts for reimbursement.  In your case it sounds like your HSA works more like my FSA. The relevant question here is 'How do I (you) withdraw funds from the HSA?' There are a few different possibilities. Some accounts have a debit card, some give you checks, some have a reimbursement process similar to my FSA. (Some have more than one option available.) In your case you should contact Bank of America to determine how to withdraw funds from your account.

negative: How do I account for this in the bookkeeping? Here is an example below:  This is how you would accurately depict contributions made by an owner for a business. If you would want to remove money from your company, or pay yourself back, this would be called withdrawals. It would be the inverse of the first journal entry with cash on the credit side and withdrawals on the debited side (as it is an expense).  You and your business are not the same thing. You are two different entities. This is why you are taxed as two different entities. When you (the owner) make contributions, it is considered to be the cash of the business. From here you will make these expenses against the business and not yourself.  Good luck,

negative: I faced something similar for travel or work reasons, and as for me I preferred wire transfer over credit card withdrawals because my bank has huge fees. My thoughts so far are: the fee can vary a lot for credit card. As for me, I can expect 5% fees on foreign withdrawals. But I considered changing bank and I think a Gold (or premium) card might be a good idea as well. The idea is you pay a big subscription (100 euros or so) but have no fee. The total of withdrawal fees could easily (if you stay long abroad) reach this amount. There are also banks like HSBC that offer low fees on withdrawals abroad, you can ask them. The problem is that you cannot really withdraw huge amounts to lower the fee (since you carry this cash in the street). for wire transfers the total fee is usually $50 or more (I had a fee from distant bank, a fee for change and a fee in my home bank). But the amount is unlimited (or high enough to be of little matter) and I needed to do this once per year or so. So I guess it could be interesting if you have enough savings to only transfer money every couple of months or so. I think Western Union is also involved this profitable business. I never used it because the fees are pretty high, but maybe it is useful for not too big amounts frequently transfered. Actually, have you considered a loan? It's a very random idea but maybe you can use a loan as a swap and then transfer money when you have enough to reimburse it all. But the question is very interesting, I think the business is pretty huge due to globalization. It is expensive because some people can make a lot of money out of it.

negative: In my opinion, the fee is criminal.  There are ETFs available to the public that have expenses as low as .05%. The index fund VIIIX an institution level fund available to large 401(k) plans charges .02%. I'll pay a total of under 1% over the next 50 years,  Consider that at retirement, the safe withdrawal rate has been thought to be 4%, and today this is considered risky, perhaps too high. Do you think it's fair, in any sense of the word to lose 30% of that withdrawal?  Another angle for you - In my working years, I spent most of those years at either the 25% or 28% federal bracket taxable income. I should spend my retirement at 15% marginal rate. On average, the purpose of my 401(k) was to save me (and my wife) 10-13% in tax from deposit to withdrawal. How long does it take for an annual 1.1% excess fee to negate that 10% savings? If one spends their working life paying that rate, they will lose half their wealth to those managing their money.  PBS aired a show in its Frontline series titled The Retirement Gamble, it offers a sobering look at how such fees are a killer to your wealth.

negative: I have read from lot of places that transferring funds from NRO to NRE is possible given correct documents are provided. Yes this is correct. The key document 15CB establishes that you have paid taxes that were due before money is transferred from the NRO account to the NRE account and/or are repatriated. Here is what I am simply doing- Steps 3 & 4 more so the step 4 can be seen as new income. So the source of the funds is originally from NRE account. However, the CA feels that since my withdrawal and deposit mechanism in NRO is cash, I might be subject to questioning.   Is there any issues in doing the above? The CA is right. The Cash Withdrawal and Cash Deposit has broken the link between the money withdrawn and the money deposited. It could easily be the case that the Cash Withdrawals were spent on expenses and the Cash Deposit is new (taxable) income to you. This new income needs to be declared and the taxes paid. If you Uncle is a close relative (the exact relationships that are called close relatives are defined by law), the return of the money can be declared to be a gift from your Uncle to you and no taxes are due from you on the money. If the funds are large, it is advised to have a gift deed. It is not a simple matter of creating a gift deed stating that your Uncle has given you a gift; your Uncle has to show how he acquired so many assets that he gave you some money as a gift and whether appropriate taxes were paid by him.  If your Uncle is not a close relative, he can still gift you up to Rs 50,000 per year without you having to pay any income tax on the money received, but again, a gift deed would be needed to account for the cash deposits. In short, keep speaking to your CA. He will advise you on the best course of action. Related Question Transfering money from NRE account in India to family member

negative: LLC in NJ. You are awesome my friend. I have the LLC started. Im just getting the low voltage waiver and deciding on the payment system but this seems to work. I can just simply print them out the invoice. I gotta check with Amazon but this was extremely helpful.