Interest Rates and Your Loan Length
- Combining current low interest rates with a shorter term could have you owning your home years sooner.
Save Money by Refinancing to a Lower Term
Today’s mortgage rates are as low as they have been in recent years. This obviously increases the number of people who could save from refinancing, but it does more than that. Combining these low interest rates with a shorter loan term could have you owning your home years before you thought it was possible, at a fraction of the total price.
Lowering Your Interest Rate
Shortening the length of your fixed mortgage from 30 years to 15 will reduce the price you will pay for your home by lowering the interest rate you will be charged. Current statistics show that consumers who choose 15-year terms save almost half a percent on their interest rates over 30-year fixed rate mortgages. This means that on a $200,000 mortgage, the immediate savings from the shorter term would be about $1,000 in the first year. Of course, this is not the only savings you will see.
Cutting Your Interest Timeline
Shortening your term from 30 to 15 years will also decrease the amount of years you will be charged interest. This has a significant impact on the savings you will see. The difference in the interest paid on the $200,000 home mentioned earlier would total almost $90,000 savings for the shorter mortgage, if both were carried for the full term.
Tag Teaming Your Mortgage Goals
If you want to get the most out of your next mortgage or refinance, I recommend taking advantage of all the resources you have to lower both your interest rate your loan length. Together they make a recipe for home ownership that more consumers may want to try.