Mortgage rates still remain at an all-time low. If you are still in a 30-year mortgage and can afford a few hundred dollars more a month, now is the perfect time to consider refinancing your existing mortgage to a 15-year mortgage. Most refinances can be done with no money out of your pocket too!
According to Freddie Mac’s most recent weekly mortgage rate survey, 30-year interest rates now average 3.85% nationwide; and, 15-year rates now average 3.07%.
In most instances, your payments will only go up a few hundred dollars a month.
Scenario 1: 30-year loan, no refinancePat gets a $200,000 mortgage at 5 percent and pays it off in 30 years: |
||||
|---|---|---|---|---|
| 30-year fixed | ||||
| Interest rate | 5% | |||
| Loan amount | $200,000 | |||
| Monthly payment | $1,074 | |||
| Total interest paid | $186,512 | |||
Scenario 2: Refinance to 15-year loanAlex gets a $200,000 mortgage at 5 percent. Five years later, Alex refinances the outstanding balance of $183,349 into a 15-year mortgage at 3.5 percent: |
||||
|---|---|---|---|---|
| First 5 years: 30-year fixed | ||||
| Interest rate | 5% | |||
| Loan amount | $200,000 | |||
| Monthly principal and interest | $1,074 | |||
| Interest paid in 5 years | $48,841 | |||
| Next 15 years: 15-year fixed | ||||
| Interest rate | 3.25% | |||
| Loan amount | $183,349 | |||
| Monthly principal and interest | $1,288 | |||
| Interest paid in 15 years | $48,552 | |||
| Total interest paid in both loans | $97,393 | |||
*Chart borrowed from bankrate.com.
When you get ready to buy, sell or refinance, make sure to give us a call before you sign!
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