More Refis Looking at 15-Year

According to the Mortgage Bankers Association, 15-year mortgages made up nearly 20 percent of the refinancing activity in October, the most recent month available.

As reported in the Wall Street Journal: "Originations of 15-year mortgages at Wells Fargo & Co. are up 55 percent through November from a year earlier. At J.P. Morgan Chase & Co., 15-year loans now account for 20 percent of refinances, up from 10 percent a year ago."

While these are increases from a low base, what you are seeing here is that the "haves" of the homeowner world are locking in a low rate while they can, while also shortening the amount of time they will have to pay their mortgage.

The main reason why people would look at a 15-year mortgage is the lower rate. While the monthly payments are higher, this may not matter as much for owners who have dual incomes and want to just get that house paid off as quickly as possible.

For example, if you bought a house five years ago, would you rather extend your mortgage out for another 30 years or pay it off in 15, so that the total amount of financing is 20 years instead of 35? Particularly if you are in your 40s of 50s, it'd be nice to have that house paid off by the time you retire.

The downside is that you will get less of a tax deduction as you near the end of the 15 year period, but maybe people don't even plan to have the mortgage that long.

An equally viable alternative would be a 7/1 or 10/1 ARM, as long as the rate is going to be lower than a 30-year. If you know you won't be in the house for more than 10 years, why pay the extra interest? According to the Mortgage Professor, the rate on a 5/1 ARM could be a full point and a half lower than on a 30, while the 15 is a half a point (Example: 4.784 vs 4.216)

On the darker side, the implication is that Americans would rather put more money into their homes each month rather than have the cash flow to invest in the stock market or other investments, but again, we are talking about 20 percent of all refinances here, not the vast majority.

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