Archive for the ‘15-year-mortgage’ Category

Low rates for 15-year mortgage lead more homeowners to refinance

Wednesday, August 4th, 2010

refinance 15-year-mortgageWe’ve been hearing lately from our lender network that more homeowners are deciding to take advantage of super low rates for 15-year-mortgages to refinance their homes. It’s not for everyone since refinancing to a shorter term typically means making additional payments each month. But for people like Kevin Hunter of Tennessee, who actually bought a house last year with a 15-year-mortgage, the benefits come down to doing the math.

For Hunter, the shorter mortgage meant paying $500 more each month than the traditional 30-year-mortgage – but saving $120,000 in interest. The extra payments are ok with him and his wife, he said, because “we live within our means and aren’t living extravagantly.”

Over at Ohio’s Residential Finance Corp., senior loan officer Joanna MacKenzie Ross says she’s sensing a growing interest among some of their clients to focus more on future savings and long-term security. “There are definitely more people coming out of the woodwork who are qualified for this kind of refinance,” she said. (Average rates for a 15-year mortgage, by the way, were just 4 percent last week according to Freddie Mac).

We talked to several other lenders in our LendingTree network and found that most have noted an interest from their clients to refinance to a 15-year mortgage. In some cases, these refinances have increased from 5 percent to as much as 20 percent of their refinancing business. Brandon Shideler, a project manager with Sydion Financial in Washington, said that refinance appears to be particularly attractive to homeowners “who have a certain degree of job security and who are thinking of retirement and paying off their homes.”

Doing the math

In many cases, several lenders told us, the additional monthly difference in refinancing from a 30-year-mortgage can be just several hundred dollars.

Paying off a mortgage early by making extra payments while keeping the 30-year-loan is another way to reduce your long-term mortgage expense. That may be the better alternative in some cases, especially for those who are closer to paying off their mortgages. However, refinancing to a shorter term becomes an appealing option to a wider group of people when interest rates are as low as they have been.

Everybody’s situation will be different so it’s hard to provide a formulaic example of how much money you will save by switching from a 30-year mortgage. The total amount homeowners save in terms of interest and amount paid over lifetime depends on how long you’ve had the mortgage to begin with, your original interest rates, and other factors. LendingTree’s and are good starting points as you move forward with your .

By Anna Cearley, LendingTree/

Photo credit: public domain image

This post was written by Anna Cearley