30 year mortgages have been the norm forever it seems, but these days 15 year mortgages are gaining ground! With the low interest rates, most of the time by paying just a little bit more each month you can reduce your mortgage from 30 to 15 years. According to the Mortgage Bankers Association, in November 2012, 23% of refinanced homes opted for a 15 year mortgage which is 51% more than in 2011! Back in 2007, only 8.5% of refinances were 15 years.
Why 15 rather than 30 year mortgages? You will save thousands of dollars in interest over the life of the loan as you are paying down more principal each month and in most cases the 15 year interest rate is also below that of the 30 year. A 15 year mortgage is not an option for everyone, but if you can afford it, it is worth considering!
Bank of America will be offering some of their borrowers principal reductions on their mortgages in amounts that may in some cases exceed $100,000!
Bank of America and 4 other larger servicers have made an agreement with state and federal regulators the the principal reductions are the result. Bank of America is the largest of the 5 servicers and will be paying out the most in the settlement, part of the reason for this is that they acquired Countrywide back in 2008 and have to pay for them as well. These principal reductions with effect about 200,000 borrowers most of which originated their loans from 2005-2007. For more on this settlement, click here.