Zimonet.com posted two articles over the past two days on how more homeowners are switching to a 15-year mortgage as a way to pay off their house and get out of debt more quickly. The articles also point out that, although it is an attractive option, it isn’t for everyone.
According to information from CoreLogic, a supplier of financial, property and consumer data, 26% of all homeowners who refinanced between January and June of this year chose a 15-year fixed-rate mortgage, up from 18.5% from all of 2009. The reason for the move this year is the historically low mortgage rates being offered. Last week’s Freddie Mac survey showed that the average rate for a 15-year fixed-rate mortgage was 3.86%.
Economists say the 15-year mortgage not only gives homeowners the incentive to pay off the house more quickly but to get out of debt sooner than later. But, while homeowners should be credited for making that effort to get rid of debt, they should consider if they can really afford a 15-year mortgage.
According to the Zimonet.com articles, those who choose 15-year fixed-rate mortgages are older, have more equity in their homes and less debt, earn higher incomes and are more likely to stay in their homes longer. If you do choose to go the 15-year route, it is advisable that you have liquid assets available for at least 12 months and your debt-to-income ratio is below 35%. It is suggested that you review your finances carefully before making the switch.
Recent Comments