25 Year Mortgage & Refinance rates
The 25 year fixed rate refinance mortgage is the best option for homeowners who want to refinance a 30-year fixed or adjustable loan without completely restarting their payment schedule. A 25 year loan will save you money with its lower rate, save you the fear of having your interest rate adjust upwards and save you time so that you can get your home paid off sooner.
The average 25 yr mortgage rate is at an all-time low so a smart financial choice would be to refinance your mortgage to take advantage of it. Low fixed rates mean savings and security in the future. Speak with your bank or home loan specialist to see what you can do to switch to a 25 year mortgage loan. You may have to pay a fee, but 25 year loans typically have lower rates than 30 year loans, so you should end up saving money in the long run.
What to Look For in a 25 Yr Mortgage
Before looking for a 25 year mortgage, make sure that it is the right loan for you. While its rates are low, you can find a lower rate on a short-term adjustable mortgage. In other words, if you plan to flip your home, do not take one out. If you are going to stay in your home, though, there are the three things to look for:
- Protection against rising rates (it should be fixed rate)
- No pre-payment penalty (lets you pay it down even more quickly)
- Lower rates than a similar 30 year mortgage
A loan which meets these standards should fit your needs now and in the future.
Fannie Mae, Freddie Mac, and 25 Year Mortgage Rates
The best 25 year mortgage rates are offered by lenders that are underwritten by the government-sponsored agencies (GSEs) — Fannie Mae and Freddie Mac. Fannie and Freddie loans carry the lowest rates and best terms. This happens because Fannie and Freddie do a better job of finding investors to provide money for your mortgage than anyone else.
Loan-to-Value Ratios and Refinance
If you are in a “normal” situation where you owe less than 80 percent of your home’s balance, finding a 25 year refinance should be relatively simple. On the other hand, if you are like the millions of Americans who either owe more than 80 percent of their home’s values or who are “underwater,” owing more than your home’s value, you can still get a 25 year refinance loan. The revised Home Affordable Refinance Program, called HARP 2.0, released in early 2012 offers a plan where underwater borrowers with Fannie or Freddie loans can refinance to a 25-year loan without having to get an appraisal.
Refinancing to a 25 Year Loan with No Closing Costs
One of the pitfalls in refinancing is that you can end up owing more on your refi than on your existing mortgage. This does not need to happen, though. Look for a lender who will give you a “no closing cost” loan. This is different from a “no cash at closing” mortgage.
With a “no cash at closing” mortgage, the lender adds all of the fees on to your balance and, although you do not pay anything at closing and usually get to skip a mortgage payment, you end up owing more money. With a “no closing cost” loan, the lender absorbs all of the closing costs and pays them for you. In exchange for this, they charge you a slightly higher interest rate. While the cost for this can vary, your rate on a no closing cost loan will usually be 0.125 to 0.25 percent higher. Paying this slight bit of additional interest has a very small impact on your monthly payment, all of which is tax deductible, but it saves you thousands of dollars in up-front cost. You will probably also get to skip a mortgage payment!
If you want to refinance to take advantage of today’s low rates, look at a 25 year fixed rate mortgage refinance. It carries almost the same payment as a 30-year loan, but will go away five years sooner. You can save money every month and be five years closer to being debt-free. Now that’s a great deal!
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