Refinancing your mortgage can give you the option to pay off your home sooner. If you’re looking to cut the amount of credit has improved or rates are lower since you financed your home, refinancing your mortgage could be a smart financial decision.
Since you’re paying off your loan in half the time, the monthly payments are higher on a 15-year mortgage but rates are lower than a 30-year mortgage. By paying off your loan in half the usual time, you’ll save more than a decade’s worth of interest payments.
Shorter loan, less interest
It’s simple math. By paying off your loan in half the usual time, you’ll save more than a decade’s worth of interest payments. In the first 15 years of a 30-year fixed-rate mortgage, for example, around two-thirds of your monthly payment gets eaten up by interest, and whatever’s left over gets applied to the principal. With a 15-year mortgage, it’s the opposite. Two-thirds of your payment goes toward paying down your balance, while only a third goes to interest.Keep reading
The 4 Cs of mortgage lending
Your ability to get a mortgage depends on four primary factors: your credit history, financial capacity, available capital, and collateral.
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