Many people are looking into the benefits of refinancing their current mortgage to a 15 year mortgage, but does it really save money? Let’s look at the pros and cons.
The Benefits of refinancing to a 15 year mortgage rate
A safe investment – Increase the equity in your home
The most obvious benefit for moving to a 15 year mortgage is the ability to pay off your home loan quickly and become mortgage-free. In these times, owning your home outright provides the security of being able to ride out the ups and downs of an uneasy market. Real estate investment remains one of the most secure and profitable venues for your dollar. It also assures that, if your income is affected by unforeseen circumstances, you are not vulnerable to a foreclosure.
The Cons of refinancing to a 15 year mortgage rate
Research the options for a 15 yr refinance rate
In these times, there are many competitive mortgage refinancing packages available, it’s important to do your research and find the bank that has the best terms for you. This does not always translate to the lowest rate, there are many costs associated with refinancing and it’s important to consider each lender’s specific terms. You’ll need to compare closing costs, and, of course, your credit rating and income will affect your terms as well.
Costs of refinancing your mortgage
If you do not plan on staying in the house for any significant period of time, you may not be able to recoup the expenses associated with a refinance. There are closing costs that can easily run into the thousands. When these costs are added to the increased monthly payment, you may have to wait years to see the upside.
Age as a factor for refinancing to a 15 yr mortgage rate
As you age, your ability to earn an income becomes more tenuous, there is no such thing as job security any more, especially for those over the age of 50. If your company goes through a restructuring or goes belly up, the odds of a person over the age of 50 being able to find new employment increase with age. Owning your home means that, if you need to look for new employment, you will not have the added stress of not being able to cover your mortgage while you’re looking.
Each of us has a unique situation and there are many factors to consider when looking to refinance your thirty year mortgage to a fifteen year mortgage. Can you comfortably afford the larger monthly payment? How long do you plan to live in the home? How will your credit score and income affect the final terms? What are all the costs associated with refinancing to a 15 yr mortgage? It’s important to consider all the pros and cons of refinancing when making your decision.