Is it advisable to refinance to lower the fixed rate from 4.25% to 3.375% over 30 years and lower the terms to 15 years if I just refinanced last 11/13?
Answers | 4
Absolutely yes. You are cutting your term in half and lowering your rate to boot.
While the idea of dropping your rate and term may sound good on the surface, it's a bit like saying "heck yes, soda pop tastes better than water!" There are more things to consider. Even though the rate is lower, the term is cut in half so the monthly payment will be about 70% higher. If that's not a problem, then great - but if that puts your back to the wall, then there are other options that can bot hallow you to pay off in 15 years AND give you a chance to pause if something temporarily interrupts your household finances. I encourage you to consult with a competent mortgage planner before you make a final decisions. All the best!
Each borrower financial situation is different and you havent told us the cost of the loan nor your cash flow situation and liquid assets. Maybe the higher payment will keep you up at night. Lots of factors involved in before you can determine if its the right loan.
The answer to your question depends on several factors. How financially secure are you? How large is your loan? Do you live in a state (NY/FL for two) with high closing costs, or a state (MO, IL, CO) with low closing costs? What costs would you be charged (either upfront, or added to the loan) to obtain that rate? When clients ask me about 15 year loans, I always cover all these topics before giving a recommendation. The last thing a lender (or a homeowner!) wants is for a loan's payments to become a burden to the borrower. Yes, you'll save a boatload of interest. The first step, however, is sitting down (in person or not) with a mortgage professional to discuss your situation in detail. IF your loan officer doesn't bring up most/all of the points above, you might consider alternatives. Just because you qualify for a loan doesn't mean it's your best solution. Questions? I'm always glad to help, and write loans nationally.