Mortgages are great because you get some money when you need it and it shows that you have been financially responsible enough to take out this large sum of money. However, when it comes to paying it back, you get bombarded with interest that just keeps on coming.
Most of the time this interest will be haunting you for 30 years. Instead of paying a high-interest rate and never seeming to bring down the cost as fast as you want, refinancing to a 15-year mortgage is always an option.
This is not always an easy option but can have significant benefits if you weigh them against the negatives. Furthermore, it is important to look out for fixed or variable interest rate loans. Fixed will guarantee you the same price throughout the duration of the mortgage, where the variable could dip super low or could rise super high. If you are an average Joe Schmoe, choosing the fixed interest rate will maintain stability for your payments and cause you less stress at the end of the day.
One of the main benefits of refinancing to a 15 year fixed interest rate loan will be that the majority of what you have been paying – interest – will be significantly lower. Not only will there be far less time for the interest to accrue, but also it will be a lower percentage anyways. Most 30 year mortgages, you wind up paying more than double the original amount you took out!
Another benefit is getting one of the biggest sources of debt out of the way. If you have a future ahead of you full of kid’s college bills, retirement, and any emergencies to take care of, the last thing you want is 15 years still on your mortgage to pay off. If you can get this large sum of money out of your way so you can have your money to yourself later for vacations, retirement, investing, or save!
NEXT: One Last Reason!
Dana George-Berberich is a freelance reporter and novelist. She has written finance articles for newspapers across the country and for companies like Dun & Bradstreet and Bankrate.
