Refinancing to a 15-Year Mortgage
Interest rates are currently so low that my husband and I just secured a 15-year mortgage at a rate of 2.78%.
The drawback is the new loan will carry a higher monthly payment — after all, we are paying back our principal in half the time — but after shifting around a few expenses, it’s within our monthly budget to bear the increase.
For us, the benefits of the loan far outweigh this drawback: First, our home will be paid for by the time our kids go to college. Second, 66% of our first mortgage payment will go towards principal, as opposed to the 32% of this month’s mortgage payment (and that’s two years into the loan…). And third, and we will ultimately save over $200,000 in interest over the life of the loan.
After weighing our options, we decided it would be in our best interest to make a few changes in our monthly budget in order to absorb the increased fee. The decision felt so responsible and surprisingly so good!
I bet you’re wondering what we’re cutting out? Well, my monthly Stitch Fix will go on hold, we’ll limit our extraneous babysitter hours, and we’re minimize take-out orders and cook nightly dinners at home instead.
If you’re interested in talking about a refinance, and connecting with my mortgage broker, please reach out — I’d love to hear from you!