Why Refinance to a 15-Year Term?
One question we often get here at Blink Lending is in terms of refinancing. Clients are always interested in refinancing, so the question arises as to which term they should refinance to? The main available loan terms are 30, 20, 15 and 10 year terms.
We know you like flexibility, that’s why we are happy to announce that Blink Lending is available to offer flex terms ranging from 7-30 years to fit your needs and lifestyle. We invite you to reach out if you have questions about this.
When looking at refinance options, it’s important to keep in mind that different terms work for different clients and each situation is different. As a general rule, 15-year rates will always be lower than 30 or 20-year terms. But keep in mind, with a shorter loan term; you’ll get a higher monthly payment, so that may be appealing to you or it may not.
What’s the main advantage of refinancing to a 15-year loan term?
If you have more money available for the larger monthly payments, the biggest advantage would be to pay off your mortgage a lot faster, which in turn means you would pay a lot less in interest. So yes, you’ll save money, but this scenario doesn’t always work for everyone.
Let’s Look At A Refinance Example
For an example, let’s study the case of one of our clients who is looking to refinance his mortgage with a balance of $300,000 and the value of the home being $450,000.
Let’s also assume a credit score of 740, 30-year rate 3.079% with a monthly principal and interest payment of $1,277.63.
The 15-year rate would be 2.418% with a monthly principal and interest payment of $1,988.81. The major difference will be in the amount of interest you will pay on the term. A 30-year interest would be $160,000 compared to the 15-year interest of $58,000, which is a huge savings of $102,000!
The 15-year loan term is always the best-case scenario when looking to pay less in interest and to pay off the mortgage faster where the 30-year gives you more flexibility with a lower monthly payment.
Not sure which refinance loan option is best for you? Call us today at 713.462.5465 and let’s discuss all your refinancing options.