The coronavirus pandemic forced the Federal Reserve to lower interest rates to historic levels to stimulate the economy. Homeowners thinking about taking advantage of low interest rates by refinancing a 30-year mortgage they have on their home should talk to one of the loan officers at MortgageDepot about a 15-year loan. The advantages offered by a 15-year mortgage could make it a better option than staying with a 30-year loan at a lower rate of interest.
Lower interest rates on 15-year loans
As a general rule, lenders offer lower interest rates on 15-year loans than they do on loans repaid over 30 years. While it is true that a homeowner refinancing a high-interest 30-year loan at today’s lower interest rates will save money by refinancing for another 30 years, additional savings can be realized by switching to the even lower rates offered on 15-year mortgages.
The other advantage of refinancing into a 15-year mortgage is the savings a homeowner realizes over the life of the loan. A shorter repayment period results in faster reduction of principal, which means the borrower pays less in interest over the life of the loan.
Build equity by faster repayment of the debt
More of a borrower’s monthly payment goes toward reduction of principal with a 15-year loan. The result is faster repayment of principal, which builds equity while reducing the cost of the loan.
Refinance now and avoid an additional fee
Homeowners who elect to refinance can avoid a 0.5% fee the federal government will impose on FHA loans as of December 1, 2020. Our loan officers have all the information homeowners need in order to save money when refinancing.
Contact one of our loan consultants to learn more about this program.