Antelope Valley Press - AV Living (Antelope Valley)

When does refinancin­g into a 15-year mortgage make sense?

- WRITTEN BY Erik J. Martin |

With the pandemic still prevalent and interest rates near all-time lows, now is a great time to think about a refinance. It may also be an opportune time to consider shortening your mortgage’s term in the process.

Many homeowners choose to refinance from a 30-year fixed-rate mortgage to a fresh 30-year equivalent. While this can lower your monthly payment, it can add extra years to the total amount of time you’ll be financing your home. That means you’ll pay more in total interest over the combined terms of your original loan and your refinanced loan than you might expect.

Bishop, CPA, a financial coach in Portland, Maine. “You’re giving up a 100-percent return on your investment in favor of something more like a 3 to 4% return. It’s also smarter to put that extra money toward paying down higher-interest credit card debt if you have it.”

“Before you saddle yourself to the higher payments of a shorter-term mortgage, make sure you’re maximizing your tax-advantaged retirement savings options, your Health Savings Account and your 529 college savings accounts,” Greg McBride, CFA, Bankrate’s chief financial analyst, says. “Paying down a low-rate, potentiall­y tax-deductible debt is a comparativ­ely low financial priority.”

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