With a $188,000 15-year mortgage at 2.37%, you’d pay interest of roughly $35,600 over the life of the loan. That’s $57,400 less than the 30-year refinance. That money could buy you a nice car or help put your child through college.
How to choose the right option for you?
But many refinancers don’t choose 15-year loans because they don’t think they can afford the higher payments. The monthly payment (principal plus interest) on a 30-year refinance in the amount of $188,000 at 2.87% is about $780. The monthly payment (principal plus interest) on a 15-year refinance in the amount of $188,000 at 2.37% is $1,242. A scary increase in the short-term but huge savings in the long-term.
But Orman says that recently 15-year mortgage rates have been so low, “that you may be able to refinance your remaining balance and end up with a payment that is not much different than what you were paying on your 30-year.”
before choosing either option, make sure you feel certain you’re going to stay in the home a few years.
