Consider a 15-year Mortgage versus 30-year - Benefits are HUGE!
If you are able to make the switch financially from a 30 year mortgage, to a 15 year mortgage, there is a huge benefit. When we refinanced our home, we were looking at a $122K savings in interest. We dropped our rate and the term, and the payment didn't increase much at all.
Moving to a 15 year term may not be for everyone. I strongly suggest working with a professional that will show you the numbers. If you are unable to lower your term due to the increased payment, inquire as to how much additional principal payments you can make in order to decrease the term of your loan 5 to 10 years.
If you have the time to talk about your mortgage situation, then I have the time as well.
It's been over 18-months since I last refinanced my mortgage.The time when I took advantage of the "historical low rates", the best rate I locked in was at 4.375% on a 15-year note. The 30-year note would have been closer to 4.75%. (From a 6% in 2004 and I remembered having to arm wrestle that lender).
Today, when I checked in with my loan officer, John Cannata - the rates are 3.75% for a 15-year note versus 4.25% for 30-year note with a Zero Origination and Zero Discount point. These rates are for FICO credit scores over 720. My husband and I fit this category.
When we refinanced our loan, we refinanced the balance at $165K. Today, my loan balance is approximately $140K (when we made 1 major principle reduction payment recently). But looking at the statement, approximately 60% of our mortgage payment goes towards Principle Reduction instead of 10% when we were at the 30-year mortgage.
I'm glad we did finally decided to refinance the mortgage into a 15-year mortgage. When we talked about it several years ago, we said that we would pay it as if it's a 15-year note. Well... life always happens. But when we are on track to refinance the house to a 15-year mortgage, we will definitely pay that baby off in 15 years! (WORST CASE SCENARIO).
With interest rates as low as they are, the mortgage payment is not as high and as far-fetch like it used to be when we first bought our home 6 years ago. My rate was at 6%.
Consider buying your home or refinancing on a 15-year mortgage rather than a 30-year if you are financially conservative.
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Loreena Yeo - Realtor® in Frisco TX
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Original Source: Consider a 15-year Mortgage versus 30-year - Benefits are HUGE!
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