3 Reasons Why a 15-Year Contract May be Better

Yusuf ChowdhuryGuidance Residential4 Comments

Most homeowners automatically think it has to take 30 years to pay for a house. That’s why many people are surprised to find out that refinancing to a 15-year contract is possible for them – and often makes more sense.

If you currently have a 30-year contract, refinancing to a 15-year one can allow you to:

1- Own your own home outright much faster
2- Benefit from lower rates
3- Save thousands of dollars by paying off your contract sooner

A 15-year contract may be more affordable than you think because cutting the length of the contract in half does not double the payments. Depending on the value of your contract and your old and new rates, the shorter contract might add a few hundred dollars a month to your payments. And the savings over the life of the contract can be significant.

Here’s an example of how it could work:

Let’s say Laila bought her home 5 years ago. She financed $275,000 with a 30-year contract at a rate of 4.5%, paying $1,393 per month. After 5 years, she has $250,000 left to pay.

Now, she notices that rates on 15-year contracts have fallen to 3.25%, and she decides it’s time to refinance. Since she’s decided to pay off her home sooner, that raises her monthly payment by $363 – an amount she can now afford.

In the end, not only will she be done with home payments 10 years earlier, she will have saved $65,000 compared to her original contract.

Your Account Executive can run the numbers for your particular situation so you can compare the costs and savings.

How do you know if this is worth looking into? Basically, refinancing to a 15-year contract may be a good option if one or more of these situations describes you:

* You’ve been paying for your home for several years
* You’ve been paying extra to pay off your home faster
* Your home value has risen

Even for homeowners who already have a 15-year contract, it’s worth checking on a refinance, because refinancing can save a homeowner money with today’s lower rates. Refinancing is also an opportunity to free up home equity for other pressing needs like tuition, business investments, and home repairs.

For a limited time, Guidance Residential is offering a special on refinances with 15-year contracts, waiving the $1,195 origination fee.* If you’re not sure whether you can benefit from today’s lower rates, talk with a licensed Account Executive to find out if refinancing is right for you. Call 703.653.0530 or schedule a free consultation.

*Both existing Guidance Residential customers and new to Guidance customers are eligible for this offer. Promotion cannot be combined with any other offer, discount, pricing exception or Special Program. Applications must be submitted between November 16, 2019, and February 15, 2020, locked by March 15, 2020. Contracts must close by March 30, 2020. Only available on approved/closed contracts. Other restrictions may apply. Refinance option may not be available for some Texas contracts. Contact us for additional information. Excludes customers who have financed with Guidance within the last 120 days.*

4 Comments on “3 Reasons Why a 15-Year Contract May be Better”

  1. Ajose

    Salam Aleykum,
    Can I refinance my contract to a lower rate? My current contact is 15 yrs, but, I will prefer a lower rate for 15 yrs instead of the rate I have now.

    1. Laila Khan

      Wa Alaikum Assalaam! Thank you for your comments. Our team can review your current contract and assist your efforts for refinancing inquiries. Feel free to reach out to us at 1.866.Guidance and we can connect you with a seasoned Account Executive to get you on your way.

  2. Marwan Alsous

    What is the rate will be if I refinance my contract to 15 years and how much my monthly payment will be included the tax property and the insurance
    Thank you

    1. Laila Khan

      What a great question! Feel free to visit our rates page for all the updated information. The insurance is a separate payment but can be absorbed in your monthly payments. https://www.guidanceresidential.com/islamic-home-financing-rates

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