The New 25 Year Mortgage is Now Available
The 25 year fixed mortgage is a new loan product that is now being offered by some lenders, but not a lot of people know it exists. With rates now back at record lows again, the 25 year mortgage is helping provide buyers and homeowners with an opportunity to payoff their home 5 years earlier and become mortgage free faster just by using the same payment they already have on a 30 year mortgage! This is also a great option for new buyers in this market too, as an alternative to a typical 30 year mortgage.
Why a 25 Year Loan is a great option
Check out this scenario below. We have a homeowner on the left column who currently has a 30 year loan at 5% and his monthly payment is $1610, but he is able to refinance into 4.375% on a “25 year loan”" and his new monthly payment is only $1646, only $36 more a month!
Check out the “Total Cost Analysis” below that compares how much the borrower will pay back in interest and mortgage payments on each loan scenario. The 25 year loan will save the homeowner over $85,882 in interest & mortgage payments compared to the 30 year mortgage, and of course will now allow them to be mortgage free 5 years earlier, all for having almost the same monthly payment they have right now.
Building equity faster
Now check out this section below which shows just how much faster the 25 year loan builds equity. On year 10 the loan balance on the 30 year loan (to the left) is $244,026, whereas the loan balance on the 25 year loan is at $217,010. Now check out the balance on the loan at year 25 on the 30 year mortgage, it still has a remaining balance of $85,340, whereas the 25 year loan has a zero balance and is now paid off!
People now want to become debt free faster
If there is one thing this great recession has taught, it is that people now look at debt and especially mortgage debt in a much different light compared to earlier in the last decade, when leveraging debt was more popular. These record low rates we are getting again are a gift, because most people thought the days of rates dropping below 4.5% were gone forever once they started spiking up over 5% in February this year.
This new 25 year loan is presenting homeowners and buyers with another opportunity to reassess their mortgage and retirement goals and align a mortgage plan that fits with these goals. As ultimately everyone wants to get rid of their mortgage as fast as possible in the most affordable manner.
50% of US Households have a rate over 5.75%
Here is an interesting fact, a recent Wall St Journal article noted that 50% of US households have an interest rate over 5.75% on a 30 year fixed loan. By converting their loan to a 25 year fixed at today’s record rates, homeowners will not only lower their monthly payment but they will immediately take off 5 years off their loan too. This may also put some people on the path to an earlier retirement too if they know they can become mortgage free faster.
If you or anyone else you know is interested in looking at this 25 year loan option, please feel free to contact me directly at 858-200-9602. I look forward to chatting soon.
Tags: 25 year fixed loan, 25 year loan, the 25 year mortgage, The New 25 Year Mortgage is Now Available
This entry was posted on Tuesday, June 14th, 2011 at 7:11 pm and is filed under The New 25 Year Mortgage is Now Available. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.