Brad Rice: What if I told you, you could pay your mortgage off in half the time. Hi, I’m Brad Rice, CEO of Amerifund home loans.
Jamie Cavanaugh: And I’m Jamie Cavanaugh, Chief Operating Officer.
Brad Rice: Today we are here to talk to you about the 15 years mortgage payment. Many people believe that refinancing only gives you a couple of options. And typically, people look at a 30-year mortgage as the primary option for a variety of reasons. Somebody may opt to refinance their mortgage, which includes things like cash-out refinance to pay off bills or:
Jamie Cavanaugh: Debt consolidation home improvement, but there are so many things that you can do to take advantage of today’s low rates. And it’s not just about trading one (30) thirty years fixed mortgage for another. Why not take advantage of the low rates and cut your mortgage term in half. Take a (30) thirty-year fixed mortgage and make it a (15) fifteen. Your payment might stay the same. It might go up a little bit, but you could cut your mortgage in half.
Brad Rice: We’re here to give you an example of what it might look like if you did refinance into a 15-year mortgage. So using an average loan amount of about four hundred and fifty thousand (450,000) Jamie, we ran some numbers, and those numbers are astonishing. You’re saving about a half a percent interest rate between a (30) thirty to a (15) fifteen-year mortgage. That’s typical on any given day. So in today’s market, we’ll use the example of three and three-quarter percent ( 3 3/4%) interest rate for a 30-year mortgage and three and a quarter percent (3 1/4%) For a (15) fifteen year. Guess what that does. So using a ($450,000) four hundred and fifty thousand dollars loan, what do you think happens at the end of (15) fifteen years?
Jamie Cavanaugh: Well, my guess would be if you had a (30) thirty year fixed, you’d probably still owe some money on that mortgage. About how much would you owe Brad?
Brad Rice: It’s a lot, Jamie, it’s a lot. So let’s give you an example. At the end of (15) fifteen years, you would owe (0) zero on the (15) fifteen-year mortgage. Where the (30) thirty-year mortgage, you still owe ($286,573) two hundred and eighty-six thousand, five hundred and seventy-three dollars. Isn’t that huge?
Jamie Cavanaugh: Would you say that a lot of that is due to the fact that you’re still paying so much interest on that longer-term?
Brad Rice: So, much more interest, the interest that you pay on a (30) thirty-year mortgage over a (15) fifteen-year mortgage? Given that separation in time is over ($181,000) one hundred and eighty-one thousand dollars. Specifically, ($181,085 ) one hundred and eighty-one thousand, eighty-five dollars for a ($450,000) four hundred and fifty thousand dollars mortgage between the (15 ) fifteen to the (30) thirty-year interest rate. It’s a huge saving.
Jamie Cavanaugh: ($181,000) one hundred and eighty-one thousand dollars in the difference in interest between the (30) thirty-year fixed and a (15) fifteen year fixed mortgage. Brad, what would you do with ($181,000) one hundred and eighty-one thousand dollars?
Brad Rice: Well, my goodness, there’s so much you can do with it. Let’s think about that. Obviously, a college education. So you’ve got some kids, and they want to go to college. How much does that run these days? ( $30,000 -$60,000) Thirty to sixty thousand dollars a year plus living expenses. How about buying a second home? That’s a good one or a boat. How about a boat? I know today a brand new wakeboard boat costs about ($180,000) one hundred and eighty thousand dollars. So that might get you one boat. What would you do, Jamie?
Jamie Cavanaugh: Well, all of the things you mentioned, you know, I’ve got a daughter, and there will be college fees coming up here sometime in the future. But you know, I might also look at buying an investment property. I’d love to build my investment portfolio. You know it’s built-in retirement. The real estate market is one of the best investments that you can ever make. So, you know, I might take advantage of the fact that not only am I saving on interest, but I no longer have a mortgage payment to make. So why not pick up a rental property?
Brad Rice: That is a great opportunity. In fact, if you look at different areas, so not just where we live, that’s a little bit more expensive, but you could take that $180,000 and possibly buy three properties.
Jamie Cavanaugh: So basically, by having a 30 year fixed mortgage, you are paying close to two hundred thousand dollars ($200,000) in interest over the life of the loan as compared to the (15 ) fifteen-year mortgage. And your loan would be paid off in half the time, and you’d be paying ($181,000) one hundred and eighty-one thousand less in interest. Boy, if there was a way to swing a (15) fifteen-year mortgage payment, while these rates are so low, I’d sure do it.
Brad Rice: If you can afford it, it’s a huge saving. But let’s also put this another way. (15) fifteen years is a long period. Let’s say that I chose to stay with a (30) thirty-year mortgage. And you chose to stay with a (15) fifteen-year mortgage, take a guess at what it would look like, what I would look like at the end of (30) thirty years versus what you would look like at the end of (15) fifteen.
Jamie Cavanaugh: Are you going to use one of those apps, Brad, those aging apps.
Brad Rice: I am going to use one of those apps. So how many of us have used one of those face apps to see what we’d look like in the future comment below and let us know. But I ran that and, take a look at what I’d look like in ( 30) thirty years.
Jamie Cavanaugh: I’m lucky me. I chose the (15) fifteen-year loan. So take a look. What I will look like in (15) fifteen years.
Brad Rice: So it’s true. There’s a big saving. You know, because we do this every day. It’s pretty easy for us to see these numbers. But what we really wanted to do is make sure that you, the people that are asking the questions, the customers that are asking the questions, really see this. So I want you to see in a graphic style exactly; what this looks like once again, (15) fifteen-year mortgage versus a (30) thirty-year mortgage. As you can see here, using ($450,00) four hundred and fifty thousand ( 3 3/4) three and three quarters versus ( 3 1l/4) three and a quarter. The interest that you pay total on the (30) thirty-year mortgage is ($300,247.) three hundred thousand, two hundred and forty-seven dollars. Where the interest you pay on a (15) fifteen-year mortgage is only $119,160 one hundred and thousand, one hundred sixty dollars. At the end of the (15) fifteen-year period, the (15 ) fifteen-year mortgage is paid off. And you’re left with a balance on a (30) thirty-year mortgage of ($286,573) two hundred and eighty-six thousand, five hundred and seventy-three dollars. That’s a lot.
Jamie Cavanaugh: Let’s talk about all the things that you can do when your house; is paid off. Some people, a lot of people, especially here in Southern California, where home prices are, let’s face it really high. We work to pay our mortgage. What would you do if you did not have to write that check to the bank every month? What would you do if you didn’t have a mortgage to pay? You could go out and buy a vacation home. You could buy an RV and start to travel. Heck, you might even be able to retire a lot earlier than you had thought you would. There are so many different things that you could do with all that extra money. And let’s not forget, you just got a hundred percent(100%) equity in your home. You own it free and clear bank has no stake in your home anymore, and you own every piece of equity in that home. (15 ) fifteen-year mortgages really do make a lot of sense for all of the reasons that we’ve mentioned here. And if you have questions, we welcome you to place those in the comments.
Brad Rice: So, Jamie, we get this question all the time, and I’d like you to answer this. Is there a specific amount of interest savings that somebody must have to justify moving from a (30) thirty-year mortgage into a (15) fifteen-year mortgage?
Jamie Cavanaugh: Well, that is a great question. There should be at least a small interest savings. You know, every situation is unique. And that’s why it’s really important that if you’re thinking about a (15) fifteen-year mortgage, that we go over your situation, and talk it through with you, run the numbers, and see what really makes sense. Please feel free to give us a call, email us, or go to our website at amerifund.com so that we can talk about your specific loan and whether a (15) fifteen-year mortgage makes sense for you.
Brad Rice: I do want to put it out there. We are going to have more and more of these sessions. And I want to encourage anybody that’s watched this. If you’re watching it live, please comment below. Now let us know what other questions do you have that you’d like us to address or answer. It doesn’t have to be exactly mortgage-related. It can be finance-related, but we would love you to comment below and let us know what’s burning on your mind. Do you have questions about being a first time home buyer, affordability? What other questions; would you put out there that people get asked?
Jamie Cavanaugh: Well, I’m excited to hear about what other topics people would like us to cover in some of our future recordings. You know, it’s important that we educate our customers. And it’s something that we really both enjoy doing so much. So what would you like to see for our next video? Let us know. And don’t forget to visit our website at amerifund.com and also feel free to call us anytime (800) 570-5626 that’s (800) 570 loan, LOAN. Thanks again for joining us today. We hope everybody has a fabulous day and don’t forget to give us a call. If you have any questions,
Brad Rice: Thank you for joining us.