How to land an ultra-low 15-year mortgage rate for your refinance

How to land an ultra-low 15-year mortgage rate for your refinance
How to land an ultra-low 15-year mortgage rate for your refinance

Thanks to this year’s historically low mortgage rates, refinancing remains a popular activity among homeowners — and it has taken on more urgency as a new refi fee threatens to push rates higher this fall.

A 30-year fixed-rate mortgage might be a borrower’s automatic first choice for a refi loan. But if you’ve been in your house a few years, refinancing to a 15-year mortgage can keep you from dragging out the debt and piling up massive interest costs.

The monthly payments on a 15-year home loan can be steeper, but the interest rates are lower: currently near an all-time low at an average 2.37%, which is one-half of 1 percentage point (0.50) below the typical 30-year mortgage rate, according to mortgage company Freddie Mac.

Some borrowers in 2020 have been able to score 15-year rates in the low 2s or even under 2%.

Could you? Here are four tips on how to get the very best deal when refinancing into a 15-year mortgage.

1. Run the numbers on 30- and 15-year loans

Most mortgage lenders offer both 30- and 15-year terms. Compare the current average rates between the two loan products, then zero in on a couple of lenders and see how their 30- and 15-year rates differ.

If 15-year mortgage rates don’t seem substantially lower, it may not seem worthwhile to accept the stiffer monthly payment that comes with the shorter-term loan.

Still, the long-haul savings can be considerable.

Freddie Mac says rates are now averaging 2.87% for a 30-year fixed-rate mortgage, versus 2.37% for the 15-year option. Let’s say you’re trying to decide whether to refinance a $200,000 mortgage balance for either 15 or 30 years at today’s average rates.

  • Your monthly payment would be $1,321

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How to check ‘refinance your mortgage’ off your list this weekend

How to check 'refinance your mortgage' off your list this weekend
How to check ‘refinance your mortgage’ off your list this weekend

Instead of spending another weekend quarantining in front of Netflix or reuniting on Zoom with classmates or former co-workers you barely remember, why not do something really valuable?

Mortgage rates in 2020 have never been lower: The average for a 30-year fixed-rate mortgage dropped below 3% for the first time, and some lenders are offering loans at 2.50% and even lower.

So this weekend, why not start the ball rolling on a mortgage refinance that will cut your housing costs?

Chances are, it’s time for you to refi. The data firm Black Knight recently said 19.3 million mortgage holders are ripe for a refinance and could save an average $299 per month. Close to 2.5 million could save $500 a month or more.

Sure, with a refinance there are forms to fill out, tax returns and other documents you’ll need to pull together, closing costs to be paid. But the sooner you get started, the better. Here are four steps to begin the process this weekend.

1. Be certain a refi is the right move

<cite>fizkes / Shutterstock</cite>
fizkes / Shutterstock

Today’s cellar-dwelling mortgage rates may look very appealing, but the terms of your existing mortgage could make refinancing a bad call.

Some mortgages carry a penalty for early repayment, especially during the first few years of the loan. You also could run into legal complications if you took advantage of a local government grant program, like one for first-time homebuyers.

Before you start down the path toward a refinance, read over your loan documents carefully to make sure you won’t get dinged with exorbitant fees.

Consider several other criteria to determine whether a refi is right for you.

According to Black Knight, you’re in a good position to land a

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