Title:
Home Loan
Mortgage Loan Refinance - Refinancing For A Shorter Term To Save Money
Word Count:
367
Summary:
Saving money with
lower rates isn’t the only reason to refinance. Opting for a shorter loan can
also save thousands in interest and free up income in the future. A short term
loan can also help you pay down your principal quicker.
Better Rates
A 15 year mortgage has a better rate than a 30 year mortgage offered the same
day – usually by a quarter of a percent. However, even if rates are the same as
your current mortgage, refinancing to a shorter mortgage can save you th...
Keywords:
mortgage,
refinance, 2nd mortgage
Article Body:
Saving money with
lower rates isn’t the only reason to refinance. Opting for a shorter loan can
also save thousands in interest and free up income in the future. A short term
loan can also help you pay down your principal quicker.
Better Rates
A 15 year mortgage has a better rate than a 30 year mortgage offered the same
day – usually by a quarter of a percent. However, even if rates are the same as
your current mortgage, refinancing to a shorter mortgage can save you thousands
in interest by paying off the principal sooner. Your monthly payments will be
slightly larger, but that is because a larger portion of the balance is being
paid.
Offers Self-Discipline
Short term loans make your decision to pay off your mortgage official. For
those that have a hard time making extra payments on their mortgage, a short
term mortgage may be the answer.
It is helpful to first look at your long term financial goals. Perhaps you are
planning to pay for kids’ college tuition, to retire, or to reduce your debt
load in the future. Decide when you want your mortgage paid off and look at the
monthly payments. You can choose a number of periods – 15, 20 or 25 year home
loans.
Factors To Consider
Low rates aren’t the only factor to consider when deciding to refinance, the
payment period is also important. By simply making larger principal payments,
you get rid of your loan sooner and save money on interest payments.
Additionally, reducing your debt level by paying off your mortgage also
improves your credit and financial situation.
However, you should also remember the immediate impact of a short term
mortgage. A larger monthly payment can put a strain on your monthly budget. You
may also find that if you plan to sell your home within a couple of years, you
will not recoup the cost of refinancing fees.
You are also limiting your financial flexibility. You are committing yourself
to a larger principal payment. You could choose to simply pay down the
principal when you have the available cash.
In the end, short term mortgages do have their benefits and should be
considered when you plan to refinance.