Why Should I Refinance from a 30-yr Fixed to a 15-yr Fixed Rate Loan?

Mortgage Rates in Maryland - Why should you Refinance from a 30-year fixed to a 15 year fixed rate loan now?  

I will tell you why.  Suppose you took out a $250,000 mortgage on your home two years ago.  You have made your payments on time (like a good boy or girl) and after two long years, guess what your principal balance is…….$243,000 – ouch!  You have barely made a dent.

Now suppose you could get in your time machine, go back 2 years and do a 15-year mortgage instead.  After two years your balance on the mortgage would be $224,000.  That’s a difference of almost $20,000!!
 
Even you do not have a time machine…well… sorry... there is still hope.  What about refinancing that evil 30 year mortgage now while the rates are great and get into a 15 year mortgage…and watch your debt melt away!!

Here is the math:  Using the scenario above, if you are two years into your 30 year loan at a rate of 5.5%, and you refinance your loan into a 15 year mortgage at 3.75%, you will save over a hundred grand.  Would you like to save a hundred grand?  I think so!

If you keep the existing 30 year loan, after 15 years of regular payments, you will be left with a balance of $177,000 you still owe.  If you refinance to a 15 year loan, you will be left with a balance of $0 after 15 years (obviously).  The difference in the payment for the 15 year mortgage is about $400/month (times 180 payments = $72,000).  $177,000 minus $72,000 equals $105,000 in your pocket!!

My suggestion – bite the bullet if you can and consider refinancing to a 15 year loan while rates are at historic lows….but only if you are interested in savings lots of money!

Feel free to contact us at any time if you are interested in refinancing your loan. You can also visit my website for more information at www.stuartepstein.com/.