dcsimg
We research, you save.
Got Questions On Rates? (855) 610-2972

Is it worth shortening my loan term?

HSH.com

Q: I can shorten the term of my loan by 12 years and lower my interest rate by two percentage points. My monthly payment will rise by $300, and the closing costs will run about $3,000. Is it worth it to refinance?

A: It goes without saying that you'll save a bundle of interest cost by killing off those 12 years of mortgage payments, and you'll more than recover your $3,000 over time. However, before you commit to that sizable increase in monthly payment, you'll want to make sure that other facets of your financial life are well managed. This includes paying off high-rate credit cards, getting life insurance in place, funding retirement and education accounts and more. If that $300 per month can be put to better or more broad use, you may wish to consider a somewhat longer mortgage term, which would put less of a commitment on your cash flow.

More help from HSH.com

  • Advantages of a FHA mortgage in 2017

    FHA loans have become more affordable in 2015, thanks to a drop in the annual mortgage insurance premium that the Federal Housing Administration charges.
  • Streamline Refinance Program to Replace HARP

    The HARP refinance program for troubled or underwater homeowners will come to an end in 2017, but a new streamline refinance program will takes its place.
  • Flex Modification: An outline of HAMP's replacement

    The Making Home Affordable Home Affordable Modification Program comes to an end on December 31, 2016, but is being replaced by a new Flex Modification program from Fannie Mae and Freddie Mac.
  • HSH.com’s yearly outlook: 2017 - Nine forecasts and outlooks

    At the start of each year, HSH.com details the important factors we think are most likely to influence the mortgage and real estate markets in the coming year.
  • HSH.com on the latest move by the Federal Reserve

    The Federal Reserve concluded a meeting today with no change to the federal funds rate and no changes to other monetary policy tools.