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 Tue. March / 19 / 2024 30-Year Mortgage Rates Move Higher for a Third Day Investopedia Pros And Cons Of Refinancing A Car Bankrate.com How to Refinance Your Mortgage NerdWallet Will Interest Rates Go Down in April 2024? | Mortgage Rates Forecast The Mortgage Reports Current Student Loan Interest Rates in March 2024 Business Insider Mortgage Relief and Mortgage Assistance Programs [2024 ] The Mortgage Reports Mortgage Rates This Week NerdWallet When to Consider Refinancing Your Mortgage Business Insider Mortgage Interest Rates Today, March 16, 2024 | Rates Tick up Business Insider Mortgage Interest Rates Today, March 14, 2024 | Rates Are Still on Track to Go Down This Year Business Insider Mortgage Interest Rates Today, March 17, 2024 | Sticky Inflation is Keeping Rates Up Business Insider Best Mortgage Refinance Lenders of March 2024 Business Insider Mortgage Interest Rates Today, March 13, 2024 | Rates Are Back Down Following Yesterday's CPI Report Business Insider Mortgage Rates Chart | Historical and Current Rate Trends The Mortgage Reports What Is An Interest-Only Mortgage? Bankrate.com How Soon Can You Refinance a Mortgage? NerdWallet Save up to $1,500 on a Mortgage Refinance With the New FHFA Program Business Insider Best Mortgage Refinance Lenders In 2024 Bankrate.com Mortgage Interest Rates Today, March 15, 2024 | Rates Drop for Second Week in a Row Business Insider Can You Refinance With No Income Verification in 2024? The Mortgage Reports Best Refinance Lenders of March 2024: Refinance Your Mortgage The Motley Fool Rates drop - Mortgage rates for March 11th, 2024 Bankrate.com Current mortgage refinance rates CNN Underscored When to Refinance Mortgage: Is it Time? - Buy Side from WSJ The Wall Street Journal Refinance Requirements: What You Need to Refinance Your Home in 2024 The Mortgage Reports Mortgage Rates Dip Below 7%. Recent Homeowners Race To Refinance. Realtor.com News Best Student Loan Refinance Companies In March 2024 The College Investor Cash-Out Refinancing: How It Works, When To Do It Bankrate.com Conventional Refinance Rates and Guidelines for 2024 The Mortgage Reports Current 15-year refinance rates — and lenders that offer them CNN Underscored How Soon Can You Refinance a Mortgage Loan? 2024 Rules The Mortgage Reports The best mortgage lenders for refinancing in March 2024 CNN Underscored How To Get Equity Out Of A Paid-Off House Bankrate.com How To Refinance An Underwater Mortgage Bankrate.com Mortgage Rate Forecast February 2024 Bankrate.com Will Mortgage Rates Go Down in 2024? What Homebuyers Should Expect Business Insider Office of Research blog: A look at cash-out refinance mortgages and their borrowers between 2013 to 2023 Consumer Financial Protection Bureau What Credit Score Do I Need To Refinance? Bankrate.com 30-year refinance rates: What to know CNN Underscored Should I Refinance My Mortgage Now? When to Refinance As Rates Drop Business Insider CFPB Releases Study of Refinance Mortgage Loans Between 2013 and 2023 Consumer Finance Monitor Mortgage Applications Increase By 7.1% Amid Rate Drop, Refinance Activity Spikes National Mortgage Professional Mortgage Interest Rates Today, March 12, 2024 | Rates Are Down, and They May Drop Further in the Coming Months Business Insider Should You Refinance Halfway Through Your Mortgage? Bankrate.com How To Get The Best Refinance Rate Bankrate.com The Sales Pitch for an 8% Mortgage: Buy Now, Refinance Later—for Free The Wall Street Journal Mortgage Interest Rates Today, March 11, 2024 | Rates Are Down. But High Inflation Could Send Them Back Up. Business Insider The Great Pandemic Mortgage Refinance Boom - Liberty Street Economics Liberty Street Economics -
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