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 refinance
Pat gets a $200,000 mortgage at 5 percent and pays it off in 30 years:
|Total interest paid||$186,512|
Scenario 2: Refinance to 15-year loan
Alex 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|
|Monthly principal and interest||$1,074|
|Interest paid in 5 years||$48,841|
|Next 15 years: 15-year fixed|
|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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