Just remember that you’ve already paid a certain amount in interest since you’re refinancing your old mortgage. You can run the numbers yourself using a 15-year vs. Conversely, refinancing a 30-year mortgage into a shorter-term home loan means you will pay off your mortgage faster. A 30-year mortgage refinance might be right for you if a shorter-term mortgage is out of your budget or you’d like to save some cash while making mortgage payments. Most mortgage applicants seek a 30-year, fixed-rate mortgage because it’s often more affordable than a 15- or 20-year mortgage. Mortgage recasting will typically reduce your monthly payment and also save you on interest over time.įor borrowers who can afford to make a lump-sum payment towards their loan principal, mortgage recasting may be a good alternative to a 30-year refinance. Mortgage recasting is when your lender recasts-or recalculates-your loan based on the remaining term and outstanding balance. Instead of refinancing, ask your lender about the possibility of mortgage recasting. However, the compounded interest you will end up paying in the long run will likely undercut the benefits of lower monthly payments. When considering a 30-year mortgage refinance, interest rates will often need to be considerably lower than your current rate in order for the math to work in your favor.įor instance, if you’re 15 years into a 30-year mortgage, refinancing your 30-year mortgage will likely get you lower monthly payments because you will be extending the smaller loan balance over 30 years. How a 30-Year Refinance Impacts Your Mortgage For example, when borrower demand is weaker, lenders may need to offer more incentives, such as competitive rates or lower fees, to attract borrowers. The rate will also depend on the lender you work with and how much risk they are willing to take on.īorrower demand for mortgages can also affect rates. However, not all borrowers get the same 30-year refinance rate because personal circumstances also come into play, such as your financial health, the size of your loan and the value of your house. Other primary factors that affect mortgage rates are the yields in the bond market, investor demand and broader economic conditions like inflation. Lenders look to the actions of the Federal Reserve and whether it hikes the fed funds rate to help determine where refinance mortgage rates are headed. How Are 30-Year Refinance Mortgage Rates Set? You will be in debt longer, unless you can pay it off early or refinance to a shorter term Higher interest rate than shorter-term loansįlexibility to pay off the loan sooner as needed, when you can afford it Leaves you with more cash each month to put towards other goals Pay more in interest over the life of the loan
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