Refinancing from a 30-year to a 15-year loan

In the Washington Post's "Where We Live" blog, real estate gurus Ilyce R. Glink and Samuel J. Tamkin write about the benefits of refinancing your home from a 30-year to a 15-year loan. As they point out, the monthly payment is significantly more on the 15-year loan. But here are the benefits:

(If) you have not refinanced in the last seven or so years and your interest rate on your original 30-year loan was 7 percent, your monthly payment would have been around $650. In this case, refinancing from a 30-year into a 15-year loan might make sense. Your payment would go up about $40 per month, but you’d end up paying off your loan in 15 years rather than 23 years (as on the original loan) or 30 years (if that was the term you chose for a new loan).

Glink and Tamkin note that as some folks approach retirement age, they might prefer to own their homes outright, without loans. Today’s low interest rates give these people the option to use 15-year mortgages to reach retirement debt free. As they write, this is always a good idea.

As always, please contact me, Mynor Herrera, for expert advice on everything real estate. I am licensed in Washington, D.C., Maryland, and Virginia. And I specialize in Bethesda and Chevy Chase, as well as the subdivisions of Rosemary Hills, Rock Creek Forest, East Bethesda and Whitehall Condominium.