Q: I am in my third year of a 20yr mortgage of $138,000 @ 6.375%. I have been offered a 15yr @4.1%. Should I take advantage of the refi? I plan to stay in the home long term. Also is the refi based on the remainder of the loan or the original amount?
A: The refinance is based upon the remaining outstanding balance of your mortgage. Since you'll be cutting a couple of years off of your loan, you'll be able to realize some pretty fair savings from both the interest rate break and not having to make payments for the two years you chop off the term.
It's probably a good idea for you to take advantage of the refinance offer. You do need to be aware of the costs of getting the new mortgage, and you might consider adding them to the loan balance or trading them off for a slightly higher-than--market interest rate. To see how these choices will affect your savings, you should use our Tri-Refi Refinance Calculator which will show you side-by-side comparisons as well as your savings against your existing mortgage.
- What is a home equity line of credit?
A home equity line of credit is a type of second mortgage that allows homeowners to borrow money using their home as collateral.
- What is a home equity loan?
Homeowners with equity in their property can take out a home equity loan that uses their home as collateral.
- What is a rate and term refinance?
Homeowners have a variety of reasons for refinancing and each reason can indicate that one refinance option or another makes the most sense.
- Is a home equity line of credit tax-deductible?
One of the benefits of homeownership is the availability of a tax deduction for the interest paid on a mortgage.
- Are ten-year fixed-rate mortgages (FRM) available anywhere?
Sure! Virtually all lenders who sell product to Fannie Mae or Freddie Mac will be able to offer you mortgage with a 10-year term. However, interest rates are usually the same as the lender's 15-year offerings.