Explore the Mortgage101 Library
Check Local Mortgage Rates
Loan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
Many borrowers use a refinance to shorten the term of the mortgage. And brace yourself, even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.
Consider Jim Neill, 48, a real estate broker and his wife Merrilyn, 55, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. This is forced savings says Jim. When we retire we can scale down and take equity out of the house.
If you can't afford the payments on a 15-year mortgage your next best means of building equity is to refinance for less than 30 years. To do so ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage for example ask for a 25-year loan.
- 3 Common Short Sale Mistakes
- How to Get Approved for an FHA Loan despite Bad Credit
- Appraisal Basics
- What Lenders Don't Reveal About Home Equity Loans
- Alternatives to Getting a 2nd Mortgage
- FHA Loans for a First-Time Home Buyer
- 3 Factors that Can Negatively Affect Your Mortgage Application
- Should You Refinance? Make Sure the Timing is Right
- FHA Eligibility with Bankruptcy and Foreclosure