The benefit of a 15-year fixed rate plan is a much lowered interest rate, comparing with a 30-year fixed rate plan.
The mortgage interest rates are holding steady with very favorable terms for buyers and homeowners. It generally feels strange to refinance from a 30-year mortgage to a 15-year one, but this unconventional transition offers special benefits that you should take advantage of if your budget allows it.
The first consideration is a much higher monthly mortgage payment in a 15-year amortized fixed rate loan. This reduces the amount of disposable monthly income you have, especially if you have a fixed salary. Before the refinance, you should first evaluate the impact of the higher expenses on your monthly plans along with your reasoning behind the change.
Good candidates for this switch are usually people who have been in their home (and the same loan) for few years (with at least 15 years left in your 30-year loan) with a suitable budget for the change.
If your goal is to just reduce the amount of time you spend in debt, you can do that simply by making extra payments toward a 30-year amortized fixed rate loan. Keeping a 30-year amortized loan you will keep the flexibility of paying extra principal payments in various months depending on your disposable income. The loan can be paid off a lot sooner than 30 years.
It’s time to speak to a loan professional to discuss the interest payments in these programs. Perhaps finding a term between 15 and 30 years will be more beneficial to your life style. Give me a call today to find out the money you can save every month.
