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Marc Dooley

10- or 15-Year Fixed Refi: Which is Right for You?

Wednesday, August 24, 2011 - Article by: Marc Dooley - CashCall Mortgage - Message

So, you've watched the stock market tank--and interest rates drop right along with it--and decided to do the smart thing and refinance your home. Good call. Because it's looking like the only direction rates have left to go, is up.

But now you're facing a somewhat intimidating decision. What duration of fixed-rate home refi do you get? The longer the duration of the loan, the higher the interest rates will be (and, of course, the longer it's going to take to get your home paid off). The shorter the duration the better the rate, but is it as affordable for you every month?

Well, don't freak out. It's just a matter of crunching some simple numbers, really. And if you're uncomfortable with that, have a chat with a lender. I know that our loan specialists at CashCall Mortgage don't charge anything for you to talk it out with them, which is pretty common practice for the industry. Feel free to call one of our loan advisors at 866-590-CASH.

So let's do some sample loan comparisons between a 15- and a 10-Year fixed rate loan. We'll use $100k for a loan amount to keep it simple.

15 Year Fixed

Loan Amount: $100,000

Example: 3.75%

Monthly Payment (Principal & Interest): $714.88

Total Interest Paid (Life of loan): $28,678.40

30 Year Fixed

Loan Amount: $100,000

Example: 3.25%

Monthly Payment (Principal & Interest): $977.19

Total Interest Paid (Life of loan): $17,262.80

So, in this example, you'd pay off your home 5 years earlier and save $11,415.60 in total interest. For about $260 more a month! See how compounded interest over the life of a longer loan can zap you? So if you can afford it, always aim for the shorter-term fixed rate loan.

Marc Dooley is the Chief Marketing Officer for CashCall, Inc.

CashCall Mortgage specializes in low interest mortgage loans and home refinancing for borrowers with good credit. Founded by the people who created DiTech, one of the first direct-to-consumers mortgage companies in 1995, CashCall Mortgage has streamlined the application and lending process, reducing their own costs and passing these savings on to customers by undercutting banks and other lenders with lower interest rates and no application fees, deposits or points. CashCall Mortgage offers a variety of products such as 10, 15, and 30-year fixed rate loans, FHA Loans, as well as a 125% Second Mortgage, allowing you to borrow up to 125% the value of your home.

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