In the final week of the year, the 15-year fixed-rate mortgage averaged a full point lower than the same period in 2019.

For many middle-aged and older homeowners with several years of equity on their homes, 2021 could be a prime time to refinance from a 30-year fixed-rate mortgage into a 15-year loan.  The three primary reasons homeowners refinance to shorter-term loans are to save money on interest, to pay off the loan faster, and to build equity. But the possibility of reduced future earnings is another key reason some refinance into a 15-year loan. Why head into retirement with a home loan?   It has been well documented how spectacularly interests rates fell in 2020. In the final week of the year, the 15-year fixed-rate mortgage averaged a full point lower than the same period in 2019, This also means that, similar to 2020, refinance rates should remain highly competitive – allowing homeowners to potentially save a ton of money on their payments.  

But don’t wait too long to refinance to a 15-year if you’re planning on it. Middle-aged homeowners are refinancing in droves, real estate agents and loan officers said. A popular refinancing age is 50, when many homeowners have dipped under 20 years remaining on a 30-year loan. And others are refinancing with an eye on selling their homes and downsizing.  “I reach out to old homebuyers all the time and ask them if they are interested in selling, and the ones that say yes usually get the idea to refinance to a 15-year mortgage and take advantage of the market,” said Laura Wilfong, associate broker and agent with Caldwell Banker Upchurch Realty. “But it’s also an individual question. Are you going to be staying in this home long term? Do you get transferred for your job every five years? In that case I would say to take advantage of the low rates and don’t do a 15-year.”

Source: HousingWire