Mortgage rates are on the rise. Mortgage brokers are now changing their tactics away from emphasizing lower rates to focusing on shortening the term of the mortgage. Often the message is that refinancing to a 15 year mortgage will result in a higher payment but a shorter period until the mortgage is paid off. This decision can have wide-ranging implications on an individual’s financial plan and should not be taken lightly.
After years of steadily declining, interest rates have moved up sharply in the past month. This has caused mortgage rates to rise as well, leading to a falloff in the number of homeowners refinancing their mortgages. This has forced some mortgage brokers to scramble to find ways to keep loan demand up.
Some mortgage brokers have changed their marketing tactics by pushing 15 year mortgages rather than 30 year loans. With mortgage rates rising, it has become very hard to advise borrowers with low rate mortgages to refinance to a higher interest rate. However, 15 year mortgages offer a lower interest rate which may make them appear more attractive. In addition, the prospect of paying off a mortgage earlier can be enticing.
The decision to refinance an existing low interest rate 30 year mortgage to a 15 year mortgage can be complex. There are a number of factors to consider that can have wider-ranging implications for an individual’s financial plan. Therefore, it is important to seek the help of a qualified professional so that you can weigh your options before committing to a shorter mortgage term with higher payments and paying fees to refinance an existing mortgage.