The U.S. Bond market is rallying and the yields are falling. These yields are the benchmarks for our mortgage rates and therefore the title of this blog is right on target.It is time to start changing your financial life from “carrying on” to getting it done. I accept no excuses for lack of action but you are the one who really shouldn’t accept any excuses. I will tell you why.
Most mortgage advertisements on the radio or television speak to those who hold 30 year loans.
The rates on 30 year loans are way down and they want you to refinance your current loan to a new 30 year loan and earn lots of money and praise from your friends. It seems like the right move because your new monthly payment will be lower; thus the savings. WRONG!
Whether you have had your 30 year loan for 3 years, 7 years, 12 years etc. your refinance will get you another 30 year loan. You do not get credit for the years of interest that you have paid. At the end of your new refinanced loan, 30 year from now, you will see how much money you have lost. Don’t kid yourself about selling the house in 5 years and then it won’t be as awful as I am telling you. If you really care look at the amount of principal you will pay off in 5 years on your current loan and compare how much you will pay off on your new loan and you will find a big shock waiting!. That is all I am going to say about the wrong way.
A 30 year loan takes about 19 years to pay off half of it. A 15 year loan a bit longer than 8 years.
A 30 year loan carries a higher interest rate than a 15 year loan. You will be done with your 15 year loan in half the time of a 30 year, and if you paid yourself the same payment during the second 15 years you would have all your money back when your old 30 year would be over.
The 15 year loans are in the mid 2% range right now. That alone should make you move to a 15 year loan. However, most homeowners won’t do it because of the higher monthly payment that comes with the 15 year loan. We can get a 15 year loan at the SAME PAYMENT that you are making on your 30 year loan.
There are 3 ways to accomplish keeping the same payment on the new 15 year loan as you had on the 30 year loan. The first way has to do with your current interest rate, how long you have had your 30 year loan and your current loan balance.
The second way has to do with your current liabilities that are paid on a monthly basis.
The last way has to do with our knowledge of the mortgage industry.
Call or write us and let us show you how we can get this done for you. Now is the Right Time
to move on this because rates do change without notice!