Mortgage Refinancing - Does Size Matter After All?Hopefully your ego has never had to experience the words, "It's okay honey. Size doesn't matter." After all, what's important is the quality right? In a perfect world, perhaps this is true, but in the realm of mortgage refinancing, what is best is usually based on length. Let me explain. The majority of mortgages are given at terms of either 15 or 30 years. This simply means that if you have a mortgage of $150,000, you will have to pay it off in pre-calculated payments (fixed mortgage) over the next 15 or 30 years depending on which loan you have chosen. Both long term (30 years) and short term (15 years) loans have their benefits and drawbacks. With a long term loan, you are going to benefit from having significantly lower monthly payments. This makes sense because the loan amount is spread out over a longer period of time. However, because the length of the loan is extended over 30 years, you will be paying higher interest rates and subsequently, more money in interest as opposed to a shorter termed loan. On the other hand, a home mortgage loan with a length of 15 years is going to have a much higher monthly payment than a 30 year mortgage. However, the tradeoff is that you are going to pay much lower in interest due to shorter terms carrying an overall lower interest rate. Some financial analysts recommend a 15 year mortgage as the best home mortgage loan. They believe that although you are paying more monthly, you benefit from having the mortgage paid off quicker which saves thousands in interest. Also, by paying more on your mortgage in a shorter period of time, you are increasing the rate at which your equity is being built. Yet again, other lenders and economists recommend the 30 year mortgage for the lower payments and tax benefits. If you are concerned about length, they recommend purchasing a 30 year mortgage (minus prepayment penalties) and pay extra on the principal. This allows you to benefit from the lower monthly payments and tax benefits as well as having the loan paid off in less than 30 years. The "best" mortgage length for you depends on what you are willing to compromise on. Both 15 and 30 year loans have their advantages and disadvantages. My advice is to use a mortgage payment calculator and see which term works best for your financial situation. Regardless of the choice, take pride in knowing that you are a homeowner. Ben Morgan is the author of Home Mortgage Refinancing. Every day this site gives away countless valuable tips, information, and breaking news to help you make the best mortgage refinancing decision.
MORE RESOURCES updated Fri. April / 26 / 2024 Mortgage Refinance Rates: Compare Current Rates Business Insider 10-year refinance rates: What to know about the current market CNN Underscored Should You Refinance Halfway Through Your Mortgage? Bankrate.com How to Refinance Your Mortgage NerdWallet Loan Modification Vs. Refinance Bankrate.com 30-Year Mortgage Refinance Rates Business Insider Mortgage Interest Rates Today, April 24, 2024 | Rates Still Slated to Go Down This Year Business Insider Only Half Of Black Seniors Approved For Home Repair Or Refinance Loans To Age In Place Block Club Chicago 15-Year Mortgage Refinance Rates: Compare Current Rates Business Insider Mortgage Interest Rates Today, April 22, 2024 | The Still-Hot Economy is Keeping Rates High Business Insider Mortgage Interest Rates Today, April 21, 2024 | Rates Remain Near 7% Business Insider How To Choose The Right Kind Of Refinance For You Bankrate.com How To Get The Best Refinance Rate Bankrate.com Will Interest Rates Go Down in May 2024? | Mortgage Rates Forecast The Mortgage Reports Average Mortgage Interest Rates: Mortgage Rates by Credit Score, Year, and Loan Type Business Insider The best mortgage lenders for refinancing in April 2024 CNN Underscored Best Mortgage Refinance Lenders In 2024 Bankrate.com Should You Refinance Your Mortgage In 2024? Bankrate.com MBA: Mortgage Applications Decreased in Weekly Survey Calculated Risk Current mortgage refinance rates CNN Underscored When to Consider Refinancing Your Mortgage Business Insider Best Refinance Lenders of April 2024: Refinance Your Mortgage The Motley Fool How To Refinance A Rental House Bankrate.com Mortgage Rates Chart | Historical and Current Rate Trends The Mortgage Reports Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports Best Mortgage Refinance Lenders of April 2024 Business Insider How Soon Can You Refinance a Mortgage? NerdWallet How To Refinance An Underwater Mortgage Bankrate.com Conventional Refinance Rates and Guidelines for 2024 The Mortgage Reports Refinancing a Home Equity Loan (2024 Guide) MarketWatch 30-year refinance rates: What to know CNN Underscored Current 15-year refinance rates — and lenders that offer them CNN Underscored Mortgage Rate History: 1970s to 2023 Bankrate.com Mortgage Rate Forecast February 2024 Bankrate.com Mortgage Rate Predictions: Are 7% Rates Here to Stay in 2024? Norada Real Estate Investments When should I refinance my mortgage? To determine if a refinance is the right move for you, you’ll need to know the ... The Wall Street Journal Pros and Cons of a Cash-Out Refinance Bankrate.com What Credit Score Do I Need To Refinance? Bankrate.com Should I Refinance My Mortgage Now? When to Refinance As Rates Drop Business Insider Office of Research blog: A look at cash-out refinance mortgages and their borrowers between 2013 to 2023 Consumer Financial Protection Bureau The Sales Pitch for an 8% Mortgage: Buy Now, Refinance Later—for Free The Wall Street Journal Current mortgage interest rates: Mortgage rates today CNN Underscored Mobile Home Refinancing | Loans & Rates 2023 The Mortgage Reports CFPB Releases Study of Refinance Mortgage Loans Between 2013 and 2023 Consumer Finance Monitor
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