Why you Should Refinance to a 15 Year Fixed Rate Mortgage Now

Why you Should Refinance to a 15 Year Fixed Rate Mortgage Now

September 14, 2017


Interest rates on home loans are at historic lows and have been low for quite some time now. If you bought your home in the past 10 years, more than likely you used 30 year fixed rate financing and got an interest rate below 5%.


You may have considered refinancing before and came to the conclusion that the small savings in interest rate just wasn't worth it. After all, refinancing to another 30 year loan would just extend the time until your home gets paid off - right? For many, it would take a considerable reduction in monthly payment to make that worthwhile.


Well, here's something else to consider . . . Would refinancing be worth it if your payment remained the same or even increased slightly? Before you say no to that, what if it meant your home would be PAID OFF in only 15 years?


While it's not for everyone, if you are going to remain in your home for a number of years, doing just that could save you thousands. You'll need to be willing to take the long view rather than just considering monthly payment.


Interest rates on 15 year fixed rates are currently near 3% (or even lower in some cases). Combined with the shorter amortization period, the effect on monthly payments and moreover on the total amount of interest you'll pay is significant.


Here's an example of refinancing to a 15 year loan for someone who bought a home 5 years ago with a 4.50% 30 year fixed rate loan, making a 5% down payment.




So, in this example, paying an additional  $210 per month saves $127,970! Also, your home would be paid off a full ten years sooner - that's ten years of mortgage payments you don't have to pay!


Also, home values have been increasing steadily in most areas. If your original loan had private mortgage insurance or was an FHA loan with MIP, its possible your new loan will be below 80% of your home's value. If that's the case, the need for mortgage insurance would be eliminated, driving your new payment down even further.


As you can see from the example above, there are a lot of variables in play to determine if refinancing to a shorter term is a wise choice for you. Your home may have appreciated more or less than the national average, your initial rate may be lower or higher, you may have more or less time in your existing mortgage, etc.


To get help and the facts you need to make an informed decision on whether refinancing is right for you it's wise to consult a professional. Triumph Bank Home Loans offers a free, no obligation home loan checkup. All of our loan officers have the training and experience to evaluate your situation and quickly provide clear answers. Those answers will also be straight as an arrow - we don't believe in high pressure sales tactics and, if you would not benefit enough to make refinancing worthwhile, we'll tell you so.




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