The COVID-19 epidemic persists, and interest rates are near record lows. As a result of these conditions, homeowners across the nation are contacting local mortgage lenders to enquire about refinancing. Thus, choosing the length of their new loan is a significant aspect of this decision.
Some homeowners want to refinance from a 30-year fixed-rate mortgage to a 30-year equivalent, but others worry about raising their overall interest. Instead, homeowners are pursuing 15-year fixed-rate mortgages to save money on interest and shorten the time required to purchase a property.
Here are the advantages of a 15 – Year Refinance that you might not know:
1. Make Use of Your Mortgage Position
The borrower could refinance a current portfolio to a new 15-year mortgage, using this money to pay off their current mortgage or other obligations. On the other hand, during low-interest rates, borrowers can refinance their existing 15-year mortgage to a new 30-year loan to pay off higher-interest debts and simplify their loan structure.
Your monthly payment may not vary considerably depending on your current mortgage and how much lower your new interest rate is compared to your old one.
2. Build Equity Faster
If you have a house that you want to live in for many years, a 15-year could be a good decision. Because 15-year loans are less common than 30-year loans, you may be able to negotiate a lower rate as well as shorter amortization periods.
This could help you pay off your home faster, saving you money in the long run.
3. Shorten the Time before You Sell Your House
Since you’ll need to pay off your existing 15-year loan before you can refinance, you may need to sell your house before that time.
You’ll need to start saving money for a down payment and preparing to move. Facing a short-term transaction can be challenging, but it’s a good time to start looking for a new home.
4. Pay Less Interest
Because 15-year mortgages are less common than 30-year mortgages, you’ll likely get a lower interest rate, making it possible to save money on interest payments. This means you’ll be able to save money on interest payments for the next 15 years.
You’ll be saving money on your mortgage payments because you’ll be paying off your current 15-year loan before you refinance. Many homeowners could save from 20 to 30 percent on their monthly interest.
5. Lower Your Mortgage Principle
If you have a 15-year mortgage, you’ll be able to pay off your existing mortgage faster. This means that you’ll be making lower monthly principal payments, which means you’ll need to save less money over time to pay off your property.
As long as you can make your payments on the new loan, your principal balance will also go down, as long as you don’t miss any.
As a result of these five benefits, you can see why a 15- Year Refinance is a good option for some homeowners. If you’re considering a 15-Year Refinance, it’s essential that you carefully calculate the costs and benefits before you decide to refinance.
Understanding mortgage refinances, and their advantages are vital to a well-run business. To get the most out of your money, you should learn as much as possible before investing.
Our objective at Clayson Mortgage is to get customers into their dream home as quickly as possible, whether they are first-time buyers, seeking a mortgage loan, or refinance their current one. Please contact us right away!