Hi all: I've been studying the idea of refinancing into a 15 year fixed mortgage from a 30 year mortgage and it can make a lot of sense depending on your goals. Realize that 32% of Americans own their homes outright and it's most people's goal to eventually own their home. With more uncertain times predicted this year, many homeowners are seeking safety with 30 year or even 15 year loans.
If you're wanting security and can afford it, 15 year loans can be had for under 5% O.A.C. I think this can be a great alternative. Not only will you pay your home off in 15 years but the amount of interest you'll pay on your loan will be far less than on a 30 year mortgage. Expect to pay roughly 20% more on your payment than on a 30 year mortgage.
Another way to pay off your mortgage quicker is to automatically pay more toward your principal every month. If you make the equivalent of 2 extra payments/year, you will pay off your mortgage in 15 years. Obviously, this requires quite a bit of discipline. There are programs out there commonly referred to as Mortgage Accelerator Programs that can accomplish the same idea. I understand these are very popular in Europe. If you pursue an idea like this, just make sure you do your homework. Remember in theory every idea sounds good. It just might not be the best thing for you.
In closing, consider accelerating the payments on your home if you can. I know this runs contrary to some of the advice out there but you need to ask yourself what camp you're in. I hope this helps. Have a great day!
Paul
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