Refinance to a 15 year Mortgage

Posted on July 20, 2017 · Posted in Connecticut Mortgage Refinance

Northeast Financial is a Connecticut Mortgage Company that refinances CT resident’s home loans.

A very popular reason to refinance is to lower your rate – thus lowering your monthly payment.  But many times when people refinance they start out with a 30 year mortgage and refinance into another 30 year mortgage.  This means that if you have had a 30 year loan for several years and then choose to refinance into a lower rate – in fact all that interest you just paid over those years meant little or nothing.  Many customers don’t realize that in the first several years of a mortgage you pay mostly interest and not principal on your property.  Another issue with refinancing back to a 30 year loan is that you are taking a step back towards paying off your home loan – and being “mortgage free.”

This is not to say that refinancing from a 30 year loan to another 30 year loan is not always beneficial.  There are some scenarios where it is.  But your goal always has to be to pay off your mortgage and not stay in constant debt.

Refinancing from a 30 year term to a 15 year term can be a very good thing if done correctly.  By taking years off your mortgage you are saving those years of interest you would have paid – which could add up to tens of thousands of dollars or more.  In the big picture you will end up saving much more.  Also by refinancing to a 15 year term (or any term under 30 years) the rates are usually much lower than what you have been paying.  15 year mortgage rates are very low (usually .5% to 1% less than a 30 year term) – so by refinancing to a shorter term the payment may not be that much higher than what you are paying now.

Here is an example:

If you have a 30 year mortgage for a loan size of $250,000.00 with an interest rate of 4.25% your monthly principal and interest payment will be $1,229.85 (and your total payments over the life of the loan would be $442,745.90).

If you have a 15 year mortgage for a loan size of $250,000.00 with an interest rate of 3.25% your monthly principal and interest payment will be $1,756.67 (and your total payments over the life of the loan would be $$316,200.95).

So essentially you would save $126,544.95 over the life of the loan (paying roughly $500 more per month) by refinancing to a 15 year Loan.


We are more than happy to break all this down specific to your home loan refinance scenario and discuss all of the options with you.  Give me a call today for a free consultation.


Thank you,


Michael Meyer
Senior Vice President of Northeast Financial
210 S. Main St Middletown, CT 06457

Company NMLS#117273 




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