Why the surge in 15-year mortgage ads?

[wguy123]

@Dana_Scully

You are one smart gal/guy! I tip my hat to you.

When we refinanced to a 15-year loan, we were able to put so much more in the principal that we paid it in full two years before my dh retired. I can’t tell you what a relief it was to know that, whatever else happens, we’ll still have this old rattletrap over our heads. And that left us with enough to install solar panels on our roof and get a $14K tax credit. :)…oh yes, and almost zero electricity bills.

Thanks! But I’m not sure the smart part is too accurate.

We bought in 2003, when the ramp up in prices was starting in earnest. The writing was on the wall and we knew it was time to buy. But, we went simple (we are simple) and small and resisted that number that the mortgage company gave us that we could afford. True, if we would’ve bought a $300K house then, it would be worth $450K now, but we would still be paying it off. Now we have zero debt and are investing a lot of money. We will be able to buy our next house (retirement house) outright and keep our existing house for rental income. Wait - I take that back: House prices are skyrocketing (already quite a bit above when the real estate bubble burst in 2008). They can’t keep climbing in price though - when is the next bubble bursting? That’s when we’ll buy.

[AlsoNamedBort]

@Corry_El

I think the reason 15yr in particular gets emphasized when rates are rising is it gives the ability at least cosmetically to offer borrowers what they’ve come to view as ‘good rate’ with recency bias. Given that as has been mentioned 15yr rates are usually lower than 30 yr. 0.8% or so lower now. Now’s 15yr mortgage rates are in the ballpark of where 30 yr rates where when rates were lowest.

This is the big thing. Refis, in general, are a lot easier for a loan officer to originate and do than a purchase. No building connections with realtors, no dealing with sellers, no real deadlines to deal with other than the lock date. When rates drops a few years back, there was a surge in refis. It was so easy. “Do you want to drop your interest rate from 8% to 3%? Of course you do!” If you had paid enough down on your previous loan, you could roll the loan charges into the financed amount and it would essentially cost $0 to the borrower.

So now rates are back up a little, all those people with 5%+ loans have already refi’d, and you have a lot of loan officers that haven’t done purchases and don’t have the experience to get any. So they only thing they can really offer is going to a 15 year a slightly lower rate.

[amarinth]

@igor_frankensteen

The fun thing is, you can get all the benefits of a fifteen year loan, and none of the down side, if you get a thirty year loan, and send in EXTRA PRINCIPLE with every payment you make.

Only if the 30 year and 15 year have the same interest rate. But generally, the 30 year will have a higher rate - so you can get most of the benefits, but not all of them.

My guess the same as some other people have mentioned. We’re about 10-15 years from the real estate bubble. Lots of people bought in the early-to-mid-2000s and now they would likely be looking at 10-20 more years of payments on a 30. A 15-year refinance would be appropriate for them.