Let’s look at an example. If your loan amount is $200,000 and you have a 30-year loan with a 3.5% interest rate, you would pay approximately $123,000 in interest over the life of the loan. If you refinanced to a 15-year term, you would pay about $57,000 in interest over the life of the loan. That’s a difference of $66,000! Remember: a shorter term would provide you with a lower interest rate…so this would lead to even more savings.
Something to consider about shortening your term is that your monthly mortgage payment may increase. The good news is that less of your payment will go to interest. As a result, more of it will go toward paying down your loan balance allowing you to build equity and pay off your home faster.
If you have questions about the process, or need help determining if this is right for you and your family, feel free to reach out to Scott Bennett at 503-703-4699 or firstname.lastname@example.org to talk about your current situation.