REFINANCE

In general, it makes sense to refinance your home loan if you plan to own the home for more than 5 years and you can save 1% or more on your interest rate. Also, if you can afford the mortgage payments and you currently have a 30 year fixed rate mortgage, it makes a lot of financial sense to refinance your home loan to a 15 year fixed product.  Many lenders are advertising interest rates on a 15 year fixed rate home loan that are nearly 1% lower than 30 year fixed rates, and in some cases, more than 1% lower. As a result, the monthly payment on a 15 year home loan may not be that much higher than the payment on your current 30 year fixed interest rate mortgage loan. For example, on a $100,000 loan amount at an interest rate of 6.25% amortized over 30 years, the principal and interest payment is $615.72. That same loan payment on a 15 year fixed rate mortgage at a 3.5% interest rate is $714.88. That is less than $100 more per month and your mortgage is paid off in one-half the time! AND, you are paying down the principal much faster, so the amount of interest you are paying decreases at a much faster rate than it does on a 30 year fixed rate home loan. The savings is tens of thousands of dollars and on just a $100,000 loan amount example, it can amount to savings of up to around $93,000 over the life of the loan!
Disclaimer:  This article is for general informational purposes only and is not intended to serve as/be financial advice.