Pay your home off in half the time…
It isn’t a trick to pay off your mortgage in half the time, it is not some scam, it is actually really simple. Most homeowner don’t think they can do this, but the reality is, most actually can pull it off if you simply put your mind to it.
How? Dump your 30-year mortgage for a 15-year mortgage. By switching to a 15-year mortgage, the average person will pay somewhere around 64% less over a 30-year loan.
Financially savvy homeowners are capitalizing on the savings they can reap by refinancing to a shorter loan term. Last quarter, nearly 40% of U.S. homeowners refinanced out of an existing 30-year fixed rate mortgage and into a shorter 15 or 20-year loan term.
With 15-year mortgages being near their cheapest levels in history, refinancing to a 15-year term is a very smart decision. Prior to 2012, 15-year mortgage rates were 0.52 percentage points lower than a 30-year loan. However, in last year’s fourth quarter they were averaging about 0.97 percentage points lower that a 30-year loan.
According to Freddie Mac, current 15-year loans require just $28,000 of mortgage interest per $100,000 borrowed. A 30-year mortgage costs $81,000 per $100,000 borrowed. Never in history have savings of this capacity been possible!!
Of course a shorter term loan is going to cost you more money per month today. But generally speaking, many people never ask, and don’t even know what the 15-year mortgage payment would be.
– A 30-yr fixed at 4.625% would run $771.21 a month and interest of $131,539 over the life of the loan.
– A 15-yr fixed at 3.375% would run $1,063.14 a month and interest of $45,191 over the life of the loan
The vast majority of people with a slight modification to their financial priorities could easily afford the difference, save themselves a fortune in interest, and own their home in half the time.