The 30 year fixed interest rate mortgage remains the most popular choice for mortgage loans because it allows borrowers to qualify for higher amounts and purchase more expensive homes. Recently, more homeowners have been opting for 15 year mortgages to avoid the high costs of 30 year mortgages. Here are several tips to help you decide if 15 year mortgage refinancing is right for you.
Automatically choosing a 30 year mortgage when refinancing your home could cost you thousands of dollars in unnecessary mortgage interest. You will pay a surprisingly higher amount with a 30 year mortgage compared to a 15 year mortgage loan. Choosing a 15 year mortgage will not only qualify you for a lower interest rate by half a percent, but you will only pay that interest for half as long.
Here’s an example to illustrate the savings:
Suppose you borrow $200,000 to refinance your home with a traditional 30 year mortgage at 6.5 percent. Your monthly payment for this loan will be approximately $1,260 per month. Over the 30 years you keep this mortgage you will pay a whopping $255,000 to the lender for interest on the loan.
Now suppose you refinance your $200,000 mortgage with a 15 year loan. The interest rate you qualify for with a shorter term length will be 5.9 percent. Your monthly payment for this loan will be slightly higher at $1,670; however, you will only pay $101,800 to the lender for interest with this mortgage.
Can your budget support paying an additional $410 per month? It probably can if plan and stick to a monthly budget. You can learn more about your mortgage options, including mistakes to avoid with a free mortgage refinancing tutorial.
To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: "Mortgage Refinancing - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
Claim your free mortgage refinancing tutorial today at: http://www.refiadvisor.com
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