Economic News

Recent study: 26 % of homeowners who refinance choose 15 year loan plans

Posted: Sep 4, 2010 10:50 PM by Montana's News Station
Updated: Sep 4, 2010 10:51 PM

MISSOULA - More people are choosing 15-year fixed-rate mortgages as opposed to 20 or 30 year loans.

A recent study shows between January and June, 26 % of homeowners who refinanced chose the 15 year loan plan.

In 2009, only 18.5 % of borrowers who refinanced opted for the shorter plan..

The 15 year mortgage has a lower interest rate than a longer plan, but also requires higher monthly payments.

Mann Mortgage loan officer Terry Graham says re-financing is a good idea if you plan to stay in the home for at least 4 years, but to make sure you understand the terms of the loan.

"I have put people into 15 year loans and they found out they couldn't afford it. If someone has a very stable income and their income is not going to change they are not going to have any undo expenses come up, then its alright to go in a 15. If not, stay in a 30 and pay more over time and you can pay it down quicker too."

Graham tells us more interest rates started dropping in 2007 and 2008, and now more people have been re-financing to take advantage of the savings.

Most 15 year loans have an interest rate of about 3.86 percent, where 30 year loans are more than 4 %.