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More homeowners are taking a two-pronged approach to refinancing: lowering their interest rate and opting for a shorter-term loan. Although your monthly payments likely will rise if you refinance from a 30-year loan to a 20-year loan, historically-low interest rates have made shorter-term home loans more affordable.
Matthew Robinson, senior public-affairs specialist for the Mortgage Bankers Association, says 30-year fixed-rate mortgages are still the most popular loan term for purchase and refinance customers, but 20-year mortgages are gaining ground, especially among refinancers. They’re the third most popular loan, behind 30-year and 15-year terms.
Although the MBA does not track applications for 20-year loans, they comprise the bulk of loans in its “fixed-rate loans/other terms” category, Robinson says. The popularity of these loans, especially among refinancers, has grown enormously in the past year alone. The MBA says that “other term” loans represented more than 15% of all refinance applications are up…
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