Going To A 15 Year Fixed Mortgage

With mortgage interest rates at amazing lows, I (Ed) figured now is the time for 15 year fixed rate refinance:
I have a 30 year fixed rate mortgage with about 23 years and ~$156,000 left. With the 15 year fixed rate mortgages at about 3.7%, I have started to look into a refinance.
| My current mortgage | 30 fixed |
| Interest rate | 5.875% |
| Amount left | $156,000 |
| Years left | 23 |
| Monthly payment (principle & interest) | $1010 |
| Taxes | 5k per year |
| Total monthly payment (with PMI) | $1,553 |
| New mortgage | 15 fixed |
| Interest rate | 3.875% |
| Amount left | $159,000 ($3000 for fees) |
| Years left | 15 |
| Monthly payments (principle & interest) | $1166 |
| Taxes | 5k per year |
| Total monthly payment (without PMI) | $1,582 |
By refinancing, I stopped paying PMI, and shaved about 8 years off of the loan by paying down the principle in an with an astonishingly low rate and almost identical monthly payments. If you are in a similar situation and value getting your house paid off as fast as possible like we do, it may pay to look into getting into a 15 year mortgage now.
Still there’s a big increase in the monthly payment almost $430 every month.
looks like you have opted for the best option. I have just started paying down my mortgage more quickly and it’s amazing just how much you can shave off it by reducing the outstanding capital balance.
I like the idea of a 15 year mortgage. When we purchased, that’s what we signed up for. Rates have fallen, almost a full percentage point since our purchase, and I’m VERY tempted to refi, but I need to run the numbers. Not sure if the fees will be worth it.
Keep up the good fight! Rock on,
NCN
Great move. We did it similar but with more refinances. Going from 30 to 20 to 15, and now 10. The total payoff will be 21 years, all refinances were no cost.
Good article Ed. It looks like the interest savings alone will be just under $69,000. That’s a lot of money to keep in your pocket instead of the bank’s. Hope you made the change to the 15 year lower interest mortgage loan.
Nice. I keep feeling like its time for me to buy a home…but even with my thrifty ways, being a grad student and living on a graduate assistant-ships’ pay, I won’t be able to do that in the near future.
Great visual comparison. I guess you could’ve paid more each month on your mortgage, but you’d be out of a lower interest rate. Congrats on the good move!
I’ve read this post before, but I stopped by to check back if you’d updated to find this awesome new theme! It looks really sharp. What Theme/CMS are you using?
The blog is running wordpress with the The Thesis Theme. The design is home grown. A friend helped with the graphic design.
Sounds like a good idea if the numbers work for you. I’m in a similar situation, but with the way the market is right now and knowing the current value of our house, even with all the updates we did, refinancing wouldn’t be an option for us. Sometimes I wonder what the big deal is with owning a home and why we got into it in the first place. Ever feel that way?
Ha.. try going back to renting where you never know if your payment will go up and/or if you’ll be consequently forced to move. Where the choice is between living with a landlord who doesn’t care about your amenities, or sinking your own money into someone else’s property to make it more livable. Where you get no tax deduction for the (almost identical) amount you pay each year, paying someone *else’s* mortgage.
The problem with home ownership is that it (sometimes) removes flexibility to up and leave whenever you want, but the benefits are usually worth it, especially if you have no plans on moving.
It’s uncanny how the numbers you posted are to my own refi last June (2010). I also got rid of PMI on my 30 year fixed and went down to 15 year fixed at 4%. My wife and I should be able to get the house paid for in less than 7 years now that we’ve paid off everything but the house. Great blog!
We just got our first house and got a sweet rate of 4.375% on a 30 year. Hopefully rates stay this low for a few years. We plan on refinancing to a 15 year mortgage.. didn’t get the 15 year from the beginning because we felt safer with a much lower payment.