- Less investment flexibility: Think of it this way: The more that youre paying out in monthly mortgage payments, the less spare funds that youll have to invest in other ventures. Returning to the above example, you could be saving $430 a month ($5,160/year) that you could instead be investing in stocks, bonds, or other investments that could return 6% 10% a year or more. Case in point: If you were to put these monies in a retirement account each month that delivered a 6% average annual return for 30 years, youd find yourself with a sum of $407 https://rapidloan.net/payday-loans-ri/,000 in-hand at the end. Not too shabby, right? Bear in mind: Although many individuals still look to homes as being historically safe investments, given your personal tolerance for risk and financial goals, you may find that the money is better invested elsewhere. To calculate potential returns on investment using your own numbers, and get a better sense of how to make your money work hardest for you, you may wish to use this calculator from .
- Unavailable for some large homes: As lenders want to make sure that youre able to actually pay them back and to maximize your odds of making timely monthly payments, theyll often decline to extend 15-year mortgages on certain larger and more expensive properties. In essence, these financial institutions ount that theyre willing to lend you so as to improve your chances of meeting your financial obligations and lower the odds that you wind up maxing out your budget. Homeowners struggling to deal with these loan caps would benefit instead by looking to a 30-year mortgage.
It all depends on your current situation and expected financial outlook. Youll want to consider factors such as potential timing, your budget, and your individual or household goals as you contemplate a refinance.
When To Refinance To A 15-Year Mortgage
If mortgage interest rates are dropping significantly, you plan on staying in your home for several years, and youre not close to paying off your current mortgage, you may wish to consider refinancing. However, important to note here is that the cost of your refinancing should be offset by the savings that you stand to receive by securing a new, lower interest rate.
If the market has shifted and rates are favorably low, note that refinancing to a 15-year mortgage may not even wind up changing your monthly payment. Under these circumstances, you could stand to save big on interest without putting a strain on your household budget.
Do you have an adjustable-rate mortgage (ARM)? Also be advised that its smart to consider refinancing to a lower fixed-rate home loan product, like a 15-year conventional mortgage, before your rate (and payments) adjust upward.
When Not To Refinance To A 15-Year Mortgage
You will find that there are a few reasons that you might want to avoid refinancing to a 15-year fixed-rate mortgage. For example: There are often significant costs associated with refinancing, such as closing costs, title fees, appraisals, etc. As you weigh your options here, ideally, youll want to see an interest rate drop from your current mortgage rate and should consider holding off on refinancing if interest rates are going up from your current rate.
You should also consider waiting on refinancing if you aren’t planning on staying in the home long enough to recoup the costs of the refinance.
FAQs On 15-Year Mortgage Rates
A: As a general rule of thumb, 15-year mortgage rates are lower than 30-year mortgage rates. Lenders typically offer lower mortgage rates to home mortgages with shorter loan terms, just one of many differences between 15-year vs. 30-year mortgages. Since 1991, the 15-year fixed rate mortgage has been 0.5% 0.75% less than the 30-year fixed-rate mortgage.