DBA For James B. Nutter & Company NMLS 2067

Hot Refinancing Trend: The Term Reduction Refinance

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Take Advantage of Today’s Low 15-Year Mortgage Rates

Since the Federal Reserve began aggressively cutting interest rates in 2007, millions of homeowners have refinanced their mortgages with the sole purpose of reducing their monthly payment. This cost-cutting refinance strategy certainly makes sense for those homeowners who need immediate relief from their high mortgage payment or who may be moving in the near future. However, an unprecedented number of homeowners are opting for a different refinancing strategy and utilizing a Term Reduction Refinance to lower their loan term from 30 years to 15-years (or even 10-years)—and saving enormous amounts of interest over the life of their loan.

Now is a great time to consider a Term Reduction Refinance. Why? Low interest rates. Not only are interest rates near record lows, but interest rates on 15-year and 10-year mortgages are extremely attractive right now when compared to 30-year mortgage rates. According to a recent Freddie Mac survey, the spread between 30-year and 15-year mortgage rates is unusually wide right now, over .75%, as opposed to the normal .50% difference. The spread between 30-year and 10-year rates is even higher–over a full percentage point.

The reason to refinance to a 15-year or 10-year loan boils down to one key word—MONEY. The long-term interest savings from a Term Reduction Refinance can be staggering, often times exceeding $100,000 in many scenarios. Depending upon your situation, homeowners who are refinancing at today’s historically low rates from a 30-year mortgage to a 15-year mortgage may even be able to lower their monthly payment at the same time.

Another reason many homeowners cite when choosing a Term Reduction Refinance is their desire to retire with their house “debt-free”, the idea being that in order to retire on time, they must establish a plan to get rid of their mortgage payment once and for all. The Term Reduction Refinance enables them to do just that by forcing them to make a 15-year mortgage payment every month, as opposed to other pre-payment strategies which require that homeowners keep their 30-year mortgage and voluntarily make extra principal payments each month or make one extra mortgage payment per year. However, many homeowners are afraid that they lack the financial discipline to make extra principal payments and choose a Term Reduction Refinance instead.

Now is a great time to consider a Term Reduction Refinance. To find out how you and your family might benefit from a Term Reduction Refinance, call James B. Nutter & Company at (800) 217-7334 and speak to one of our non-commissioned Loan Officers. We’ll help you choose the refinance strategy that makes the most sense for you and your family and refinance your mortgage to a low fixed rate.


George B. Lopez
Executive Vice President
James B. Nutter & Company, NMLS #2067
4153 Broadway
Kansas City, MO 64111
(800) 217-7334

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