Erasing mortgage debt has become a priority for many homeowners who are in the financial position to combat their home loan obligation. Low interest rates have created an environment where homeowners can get more affordable monthly mortgage payments but many are opting for shorter terms on their home loan so that they can pay off their mortgage in a timely manner and, in some cases, at a lower cost.
Reports have indicated that homeowners are opting for shorter terms on their mortgages rather than a traditional 30-year fixed rate mortgage. Refinancing has been an option for many over the past months as interest rates have been quite low and have offered affordable home loan options for homeowners who were previously struggling or simply wanted away to erase their home loan debt faster.
Homeowners have been able to refinance to 20-year or 15-year mortgages and, in some cases, get a lower monthly mortgage payment or set themselves on a path to erasing their mortgage debt much sooner and at less cost overall. Some homeowners, like those who may have a 30-year fixed mortgage, often end up paying almost double their original home loan amount when time and interest are factored in.
However, shorter-term mortgages like a 15-year fixed mortgage not only can come with a lower monthly mortgage interest rate, but can save homeowners thousands when they have completely paid off their home loan obligation. While not all homeowners can obtain a shorter mortgage term limit and gain a lower monthly mortgage payment, homeowners who are using this refinancing option for a shorter mortgage are looking at the big picture.
For those who can afford the cost, refinancing can bring a lower interest rate on one’s home loan and even if a higher monthly mortgage payment is required, a shorter-term mortgage allows homeowners to get out of mortgage debt faster and at a much cheaper cost. For this reason, many homeowners have been refinancing to shorter home loan terms. While refinancing in general may not be in every homeowner’s best interest and some will not be able to afford the payment terms of a shorter mortgage or the costs of refinancing, many reports are stating that homeowners who are on firm financial ground are using refinancing and short-term mortgages to set themselves on a faster path to owning their home outright.