Happy New Year friends! [JOE AGENT] here again with Berkshire Hathaway HomeServices PenFed Realty Texas. Today we're going to discuss if you should refinance to 15 years. If you’re thinking of refinancing your mortgage, you’ll pay origination fees and closing costs, but it may be worth it to you to get a better interest rate and better terms. Refinancing to a 15-year loan may mean you pay a little more for your refinanced mortgage, but the amortization schedule - how much goes toward interest and how much goes to reducing your principal - is definitely more favorable than a 30-year.
Let's break this down. The average closing costs for a mortgage refinance are about $5,000. Costs will vary according to the size of your loan and the state and county where you live, but you can expect to pay anywhere from 2% to 5% of the borrowed amount. Closing costs can be rolled into the financing, so you don’t have out-of-pocket expenses, but that will add to the principal that needs to be repaid. For a $200,000 refinance, your closing costs range between $4,000 and $10,000, but you’d save much more than that in interest.
Could you simply make higher payments on your current loan? Yes, any amount you add onto your mortgage payment will reduce principal immediately but it won’t impact your interest rate until you refinance or pay the mortgage off.
it could be easier or cheaper to refinance to a 15-year mortgage. You’ll get a better interest rate because shorter terms lower risks for the lender and you could change the type of loan based on fixed, adjustable or hybrid rates.
Interested in talking more about this? Call me at _______ or simply shoot me a message and I can go into more detail about the ins and outs of refinancing your home.
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