Should You Refinance Your Existing Mortgage for a Shorter Term?
Admin • March 16, 2021
Have you held your mortgage for some time now? Then it may be time to consider making a change to reduce your overall costs and commitment — namely, refinancing to a shorter term. Not sure if this is the right move for you? Here's what you need to know.
Why Refinance for a Shorter Term?
Many mortgage holders consider refinancing at least once during the course of their loan. But why specifically choose a shorter mortgage? First, shorter-term loans tend to have lower interest rates than traditional 30-year mortgages. Each additional percentage saved on an interest rate can add up to hundreds or thousands of dollars saved over the course of a multi-year loan.
Even if the interest rate itself isn't that much different, the shorter period will result in less interest accruing. The differences between accrued interest in the first few years of a mortgage may be minimal, but you can end up saving half or more on interest when you reduce the later number of years.
Finally, you pay off your home sooner than originally expected. If the lower payments of a longer, 30-year loan were the right choice back when you bought the house, is that still the case? Do you want to retire soon and would benefit from not having a mortgage payment? Can you qualify for a better loan with your current credit? Do you earn more money and can afford to accelerate payoff? If so, explore your choices.
What Options Are Available?
The good news for those considering a refinance is that you can tailor your term length. Although one of the most common choices is to halve the traditional 30-year loan (15-year term), you can often choose from many nontraditional lengths
— including 5, 10, 15, 20, and 25 years.
Each borrower should choose how to approach refinancing terms to suit their particular needs. If you want to pay off your home by a fixed retirement date, for instance, you might choose a specific term based on this deadline. Alternatively, those who simply want to reduce overall costs might consider reducing their payment term by five or ten years to speed up the process.
What if You Can't Get a Shorter Term?
Of course, committing to a shorter mortgage shouldn't be done on a whim. Some homeowners are hesitant because their finances may change in the future. If you lose a job or see a slowdown in business, a higher monthly payment may become difficult. In this case, an anxious homeowner might consider traditional refinancing and then make higher voluntary payments or twice-monthly payments.
What if you can't qualify for the shorter term based on your income or credit history? The good news is that you may still be able to qualify for a more traditional 30 year refinance, which has lower payments and allows more leeway in your debt-to-income ratio. If the interest rate is sufficiently lower now than when you bought the house, you can still save significant money.
If you find yourself limited to a longer mortgage right now, talk with your lender about what it takes to successfully get a shorter mortgage. You may be able to boost your credit score, focus on paying off other debts, or stabilize your monthly income. Make goals so that you can take advantage of a short mortgage as soon as you're ready.
Where Should You Start?
Start by learning more about all your term options as a current mortgage holder. The refinancing specialists at Secure One Capital
can help. Call today to speak with a mortgage professional about your particular loan and get on the road to money savings and a financially stable future.
The refinancing process replaces your current home loan with a new one. But when should you do it? See some scenarios where you should consider refinancing.
A college education for a child is expensive, but homeowners can borrow against their homes and use the money to pay for college. Discover tips to do this.
Vacation homeownership is an ideal way to enjoy trips and not worry about hotel bills. Read on to discover six benefits of such an investment.
One way many homeowners become a landlord is to rent out their old home when they move. Discover three key financial steps to take to help ensure success.
Refinancing your mortgage can be an excellent way to save money on your loan. Learn more about the break-even point and how it can affect your decision.
Do you want to purchase an investment property? Join this lucrative opportunity and read on to learn about how you can use your home for capital.
If you are getting ready to purchase a new home, you must have a home appraisal and/or a home inspection. Read our blog to learn more and see what you need.
Mortgages are an ideal way to finance your dream home. Read this blog to discover four precautions to observe before you apply for a mortgage.
A guest blog by Volodymyr Barabakh project director of Fortress Home Construction Co.
Refinancing involves several intricate details that could make things difficult. See three common mistakes to avoid when refinancing.
BROWSE OUR WEBSITE
CONTACT INFORMATION
Address:
2600 Michelson Drive, Floor 3
Irvine, CA 92612
Email: info@secureonecapital.com
Phone: 949.337.4700
Toll Free: 833.568.9356
Fax: 562.684.4388
Hours of Operation:
- Mon - Fri
- -
- Saturday
- -
- Sunday
- Closed
OUR LOCATION
Secure One Capital Corporation is a California Corporation NMLS # 239738 Licensed under the California Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. Secure One Capital provides financial options to consumers, not licensed in California to provide personal loans or Solar Financing.
Texas Consumer Complaint Disclosure |
Illinois Community Reinvestment Act Notice
NMLS Consumer Access | State Licenses & Disclosures | Advertising Disclaimer | Social Media Disclaimer
Eligibility Assumptions & Disclaimer | Privacy Policy & Terms and Conditions | eSign and Consent
TCPA Compliance
Equal Housing Lender | Equal Employment Opportunity Employer
Copyright © 2024 All Rights Reserved