More Homeowners Refinancing to Shorter Mortgages

Freddie MacAs mortgage interest rates dangle near record lows, more homeowners are doing away with their 30-year loans in favor of shorter alternatives, reports the L.A. Times. And when you can get away with a seven-year fixed-rate mortgage for just 3 percent, why not? That is, provided you have the cash to take advantage of this rare opportunity.

Want to refinance into a seven-year fixed-rate mortgage at 2.99 percent? Or how about 10 or 15 years fixed in the mid-3 percent range?

These may sound suspiciously like teaser quotes, with tricks in the fine print, but they are in fact signs of an important shift among American homeowners: Not only have they been refinancing at a robust pace in recent weeks, but they're dialing down on the remaining number of years that they plan to pay on their mortgages.

Freddie Mac chief economist Frank Nothaft calls the shift to shorter terms "a very strong trend." In his company's latest quarterly survey of refinancers, more than 1 in 3 borrowers who ditched their 30-year fixed-rate loans opted to replace them with 15-year or 20-year mortgages at near-record low rates.

Read the full story at the L.A. Times.

For more insight on mortgages and refinancing see these AOL Real Estate guides:

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
Latoya Rutledge

Seller financing can be a great way to get a house sold without slashing the price. By recognizing the millions of people who can't get traditional financing as potential buyers, resourceful property sellers (and their real estate agents) can minimize their time investment in getting a property sold. Even better, sellers who offer financing can usually get a higher asking price for their property, even in the slowest markets. Clearly this is a win-win situation.

Most home sellers never consider financing the buyer directly because they are not aware of the benefits or don't fully understand how creating a note works. Let's take a closer look at the advantages of owner finance.

May 26 2011 at 2:27 AM Report abuse rate up rate down Reply