Should I Refinance to a 30-year Mortgage for a Better Rate?
Reader Question: Is it advisable to refinance and do another 30-year loan when the rates are better for 30 versus a 20- or 15- year mortgage? The rate we pay now is 6.25. The quoted rate today was 4.875 on a 30-year mortgage.
It depends on your specific situation. Obviously, you will save money by paying less in interest at the rate you were quoted. One question to ask yourself is — how long do you plan on living in your current home?
If the current home is not your forever home and you plan on moving sometime in the future, then you will not only pay a lower interest rate by refinancing your mortgage for another 30 years, but will most likely also lower your monthly payment. This would only be the case if your current mortgage balance is less than the original loan amount.
If you plan on living in the home long-term, then paying off your mortgage in 15 or 20 years may sound attractive to you. In this scenario, the amount of interest you pay over the life of the loan will end up being less since you will pay off the loan in a shorter length of time. You can learn more about weighing your options through the articles provided below.
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