Home Loan Mortgage Loan Refinance Refinancing For A Shorter Term To Save Money

Home Loan Mortgage Loan Refinance - Refinancing For a​ Shorter Term to​ Save Money
Saving money with lower rates isn’t the​ only reason to​ refinance .​
Opting for a​ shorter loan can also save thousands in​ interest and free up income in​ the​ future .​
a​ short term loan can also help you​ pay down your principal quicker.
Better Rates
A 15 year mortgage has a​ better rate than a​ 30 year mortgage offered the​ same day – usually by a​ quarter of​ a​ percent .​
However,​ even if​ rates are the​ same as​ your current mortgage,​ refinancing to​ a​ shorter mortgage can save you​ thousands in​ interest by paying off the​ principal sooner .​
Your monthly payments will be slightly larger,​ but that is​ because a​ larger portion of​ the​ balance is​ being paid.
Offers Self-Discipline
Short term loans make your decision to​ pay off your mortgage official .​
For those that have a​ hard time making extra payments on​ their mortgage,​ a​ short term mortgage may be the​ answer.
It is​ helpful to​ first look at​ your long term financial goals .​
Perhaps you​ are planning to​ pay for kids’ college tuition,​ to​ retire,​ or​ to​ reduce your debt load in​ the​ future .​
Decide when you​ want your mortgage paid off and look at​ the​ monthly payments .​
You can choose a​ number of​ periods – 15,​ 20 or​ 25 year home loans.
Factors to​ Consider
Low rates aren’t the​ only factor to​ consider when deciding to​ refinance,​ the​ payment period is​ also important .​
By simply making larger principal payments,​ you​ get rid of​ your loan sooner and save money on​ interest payments .​
Additionally,​ reducing your debt level by paying off your mortgage also improves your credit and financial situation.
However,​ you​ should also remember the​ immediate impact of​ a​ short term mortgage .​
a​ larger monthly payment can put a​ strain on​ your monthly budget .​
You may also find that if​ you​ plan to​ sell your home within a​ couple of​ years,​ you​ will not recoup the​ cost of​ refinancing fees.
You are also limiting your financial flexibility .​
You are committing yourself to​ a​ larger principal payment .​
You could choose to​ simply pay down the​ principal when you​ have the​ available cash.
In the​ end,​ short term mortgages do have their benefits and should be considered when you​ plan to​ refinance.

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