Source: The Ascent —
In August 2020, the average 30-year mortgage rate fell to under 3%. Since I had a higher interest rate than that on my existing mortgage loan, I decided to jump on the opportunity to refinance. And at first, my thinking was that doing so would lower my monthly payments.
But then I decided to refinance in a manner that would raise my monthly payments. And I’m really happy I did.
When a higher mortgage payment isn’t a bad thing
While mortgage rates were way down for 30-year loans at the time I decided to refinance, they were even lower for 15-year loans. So I reached out to some refinance lenders, crunched the numbers, and realized that refinancing to a 15-year mortgage would raise my monthly payments by about $300.
But that’s a good thing. While I’m spending more money each month on my mortgage payments now than I was a few years ago, I’m also on track to pay off the loan much sooner. At the time of my refinance, I had about 22 years left on my mortgage. So this cuts that repayment period by seven years.
