Refinancing Mortgage Can Have Advantages

The date of their mortgage pay-off party has moved. When the couple bought their St. Paul, Minn. property, in 2005 she bought a home which was locked in an annual interest rate of 6 percent for 30 years.

But with the mortgage rates on amazing lows, refinanced them in a 156%, 15-year-old mortgage that saves them more than $ 100,000 in interest and pays off the mortgage, by the time the 3-year-old son in college. all this for a $ 100 increase in their monthly mortgage payment.

In the case of a shorter term mortgage refinancing if you can afford the payment seems an obvious move. smart money you pay much less in interest, rather get rid of the fixed costs and monthly cash flow more freely have in retirement.

Plus there's the high that homeowners feel when they are their last mortgage payment.

"It's just nice to think that it will happen," said David Of Ripe, 33.

But there is a camp that lock mortgage in a shorter period is unwise think, especially when the 30-year mortgage rates are low and the economy is uncertain.

Alex a mortgage banker with Residential Mortgage group, Minnetonka, Minn., said that this difficult economic rack the conservative side in most of us.

"When savings rate increase, when people start to talk about their 15-year mortgages or mortgage payment ahead of schedule, which is actually just a form of insurance.They are no longer so comfortable with the fact that the sky is the limit and the ladder rises they economic, "he said.

Anticipate your financial future is difficult, but that's what Bill Schwietz, President of the Association of Minnesota mortgage, to allow customers to do so.He has several friends that started with the 30-year mortgages and loans refinanced 15-year-old with a big promotion and again in a 30-year loan refinanced when their children hockey school tuition fees and became too much.

Problem is that you extend your loan and reels in the closing costs with each refinancing.

Kate independent mortgage Branch Office Manager for the fairway in Bloomington, Minn., said 15-year-old loans can make sense.But they're getting reminds its customers, there is no law against the payment of a 30 year mortgage on a 15-year-old program.

Here is the example that they calculated: on a 30 year mortgage at 4.5%, $ 200,000, you pay $ 164,813 in interest with a monthly payment of $ 1,013.37. payment of that loan in 15 years (by payments on account for about $ 517 per month on the balance of the mortgage) and your monthly payment would be $ 1,529.98, and you would pay $ 75,396. in interest If you went with a 15-year-old mortgage at 4% instead, would you $ 66,286 in to pay interest and a payment of $ 1,479.37.

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