15 Year Mortgage Looks Juicy
If you have a 30 year fixed mortgage that is a few years old and had a reasonable interest rate, 5.5% - 7.5%, there may be an opportunity to refinance and really save on interest payments. While the 30 year fixed mortgages have stubbornly refused to really drop dramatically, though Bank Rate is showing them at 5.42% which is historically low, just not as low as everything else has dropped.
A curious thing shows up on the rate curve, Bank Rate is showing the 15 year mortgage at 4.98%. Another interesting thing that my brother, a mortgage broker at Mortgage Foundation (if you call, ask for Eric, tell them I sent you), said that while Fannie Mae has instituted a lot of penalties and extra fees on the 30 year mortgage that don't show up on the published rate, but hit you with the actual mortgage, they aren't doing so on the 15 year mortgage.
If your house can appraise sufficient for you to have some decent equity in your home, you might qualify for a really low rate on a 15 year mortgage.
As an idea, if you owe $250,000 at 7.5%, than your monthly payment is $1748.04, $1562.50 of which is interest (that's on a fresh loan, not necessarily the case if you are 4-5 years into it). On a 15 year mortgage at 5%, your payment would go up approximate $225 to $1976.98, but only $1041.67 would be interest.
In other words, if you could find an extra $225/month to pay at the lower rate but shorter your, instead of paying down your mortgage by less than $150/month, you'd be paying over $900/month right off the bat.
If you have money on a second mortgage that you could consolidate down to a single payment, or any credit card debt, the savings could be huge. You might be able to combine your car loan into the mortgage, knock $300-$400/month in car payments off, and find yourself with more money each month and paying your loan off sooner.
I'm getting the paperwork together, go see if it's right for you.
A curious thing shows up on the rate curve, Bank Rate is showing the 15 year mortgage at 4.98%. Another interesting thing that my brother, a mortgage broker at Mortgage Foundation (if you call, ask for Eric, tell them I sent you), said that while Fannie Mae has instituted a lot of penalties and extra fees on the 30 year mortgage that don't show up on the published rate, but hit you with the actual mortgage, they aren't doing so on the 15 year mortgage.
If your house can appraise sufficient for you to have some decent equity in your home, you might qualify for a really low rate on a 15 year mortgage.
As an idea, if you owe $250,000 at 7.5%, than your monthly payment is $1748.04, $1562.50 of which is interest (that's on a fresh loan, not necessarily the case if you are 4-5 years into it). On a 15 year mortgage at 5%, your payment would go up approximate $225 to $1976.98, but only $1041.67 would be interest.
In other words, if you could find an extra $225/month to pay at the lower rate but shorter your, instead of paying down your mortgage by less than $150/month, you'd be paying over $900/month right off the bat.
If you have money on a second mortgage that you could consolidate down to a single payment, or any credit card debt, the savings could be huge. You might be able to combine your car loan into the mortgage, knock $300-$400/month in car payments off, and find yourself with more money each month and paying your loan off sooner.
I'm getting the paperwork together, go see if it's right for you.
Labels: fixed rate mortgage, interest rates, personal finance
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