Forgotten Your Password?

Need to Register?

Question Icon

I heard on radio that if I have 30 year fixed mortgage of 5% or more, I can save with 15 year fixed mortgage

They said 100K over the life of loan. Is that right? will my payment be less also? by SofiaHeath from Santa Clara, California. May 12th 2011 Reply


Chris Gummerson (cgummerson11)
#394 ranked lender in California - 648 contributions

Some people who have a higher rate, on a loan that they have been paying on for a while, can get a 15 year loan for a similar payment. If you have just purchased or refied and have a new balance, going to a 15 year term, will increase the amount you have to pay, since the amortization period is less. Take a look at the calculators and see if it makes sense.

May 12th 2011
0
0
Bruce Conn (BruceConn)
#276 ranked lender in California - 19 contributions

Sofia, it's a stretch to say it's true. Even so, the analytics should not be based on the "lifetime of the loan". Why? Because 10 years from now the payments will be the same but the dollar will have inflated - kind of like buying gas today at 2001 prices. The better benchmarks are short term: What are you paying now in interest, what interest would you pay on the new loan, what savings does that generate, and what are the costs to get the loan? Finally, how many months of those savings are required to pay back the cost of the loan? If it hasn't fully paid the costs in interest savings in less than 24 to 30 months, it's not a wise move. Exceptions? Of course. For example, if you absolutely know you'll not sell for a very long time, if the timing coincides with retirement, and if you want to use the opportunity to get cash-out. If you have questions I will be glad to help in any way I can. Bruce Conn, California Equity & Loan, (800) 696-0696 or Bruce@CaliforniaEquity.com. (I'm in a conference Friday until about 3.)

May 12th 2011
0
0
Chris Corica (chris@myqcfunding.com)
#22 ranked lender in New York - 59 contributions

The amount in interest saved will be determined by the loan amount. All things being equal, a 15 year payment is always higher then a 30 year loan. The big difference is you are paying interest for 15 fewer years.

May 12th 2011
0
0
Subscribe to our news feed.