Before getting an understanding of 15 year refinance, try having a peek into what actually is refinancing? Refinancing is the replacement of an on hand debt obligation with some other debt obligation but under varied terms. Refinancing terms and conditions might widely vary by country, state or province depending on a number of economic factors like projected risk, inherent risk, currency stability, political stability, credit worthiness of the borrower, credit rating of the country and banking regulations. Refinancing is called dent restructuring is debt replacement occurs due to financial distress.
What is a 15 Year Refinance?
A 15 year refinance is a type of loan for which the interest rate remains the same for the loan duration. This can be explained by an example. On a 15 year refinance of $300,000 with interest rate of 5.75%, monthly payments would be around $3,097.90. Thus, the interest rate which is 5.75% remains the same for the loan life. People looking for a fixed and predictable deduction out of their monthly budget should go for 15 year refinance loans. These loans are also for the people who desire for a shorter loan term and the ones who have the capability of tolerating higher monthly payments.
The Advantages and the Disadvantages of 15 Year Refinance
The main advantages of a 15 year refinance include:
• Predictable monthly payments
• Paydown on 15 year refinance is half the time of a thirty year refinance
• 15 Year Refinance Rates are generally lower than 30 year refinance rates
• You do not need to worry about fluctuations in 15 Year Refinance Rates.
The disadvantages of a15 year refinance:
• Monthly payments are generally higher in comparison to a 30 year refinance. This is the reason why people cannot qualify for these loans very easily.
• Refinance tax deduction on a 15 year refinance is less in comparison to a 30 year refinance.
Selecting 15 Year refinance Rates
One of the best methods of taking advantage of very low rates of interests is refinancing a 30 year mortgage to a 15 year loan. This will in no ways lower the monthly payments that you need to make but it will obviously improve the payments. A 15 year refinance loan will get your property paid off quickly and will have you making no payments in not more than 15 years. Believe it or not but 15 year refinance loans are better than they might ever seem. This is because these tend to be shorter loans that carry fewer risks for the bank. These loans even carry low rates of interest in comparison to the traditional 30 year refinance loans. The rates of interests and the relationships between 15 and 30 year refinance rates can greatly vary but you should expect to pay approximately between 20% and 30% less for a 15 year refinance loan. In order to get hold of an ideal and exact quote, you need to contact a professional loan broker.
Preparing to the Fetch the Benefits of 15 Year Refinance Rates
One of the best things regarding 15 year purchase mortgages and refinance is that they can be found very easily. There are many lenders who offer these loans and this is something that has created a very competitive market. Nevertheless, it should be taken into account that the 15 year refinances are a little difficult to qualify for because of their higher payments. This is because lenders will generally have a look at the debt to income ratio that you might be having. Therefore, you should have more income for qualifying for a 15 year refinance. Apart from this, you should have a proof of tax returns, income and bank statements. It is also important for you to identify credit issues and get them fixed by taking the help of a qualified broker prior to applying for this refinance loan. This will help you in increasing your chances of getting the loan approved. The best time to get these loans is when the fees and the interest rates are low. You must also keep in mind that supply and demand are instrumental in affecting the rates of interest of these loans.