Refinancing to a 15-Year Fixed-Rate Mortgage Could Save You Thousands
Looking at the number of years left on your 30-year fixed-rate mortgage can feel daunting. If you’re trying to pay off your home before retirement or your kids go away to college, thinking about how many more years you’ll be paying on the loan (and how much interest you’ll pay over 30 years) can make you wonder, “isn’t there a way I can pay this off quicker?”
Actually, there is! And, refinancing into a 15-year fixed-rate mortgage may just be the answer you’re looking for.
What’s the difference between a 15-year mortgage and a 30-year mortgage?
The length of your mortgage loan and the interest rate associated with it are two things that factor into your monthly mortgage payment. The shorter your loan’s term, the more favorable the interest rate will be. Your loan term also determines how long it will take you to pay off your mortgage.
How will refinancing into a 15-year mortgage save me money?
The math is simple. A great interest rate plus a shorter term will maximize your savings over the life of your loan.
Since you will essentially be paying off your mortgage in half the time, more of your monthly payment will go toward principal, saving you thousands of dollars in interest in the long run.
Not only will a 15-year fixed-rate loan put you on the fast track to paying off your mortgage sooner, you’ll also benefit from the lower interest rate that comes with a shorter term. And, with interest rates near historic lows, a shorter term may not necessarily cause a significant increase to your monthly mortgage payment.
Looking for more ways to save money on your mortgage? Here are some quick tips on how to save even more money when you refinance.
Is refinancing to a 15-year fixed-rate mortgage the right move for me?
Have you been paying ahead on your mortgage or making substantial additions to principal? Maybe you’ve received a couple raises or now have two incomes in your household instead of one. Any of these situations signal that you might be in a better position to afford your home than when you originally took out your 30-year mortgage.
If you’re already making extra payments on your mortgage loan, it might make sense to consider refinancing your mortgage altogether. After all, you may qualify for a better interest rate and could save a significant amount of money over the course of your loan by adjusting the term of your mortgage.
Deciding if and when to refinance can be a confusing process, but it doesn’t have to be. Whether you’re interested in learning more about refinancing, or it has been a financial goal of yours for quite some time, our team of experienced loan officers can help.
Simply send us a message and we would be happy to put you in touch with someone who can help you determine whether you’re in a good position to refinance and the best approach to take.
In the meantime, feel free to read up on our other refinance-related articles for more information about the refinancing process and whether it’s the right financial move for you.