Though the 30-year mortgage may be the most common amortization period for homeowners, the 15-year plan is gaining more of a following among recent buyers as well as those looking to refinance, as recently detailed by National Public Radio.
In early September during the American Mortgage Conference, the Wealth Building Home Loan program was officially unveiled to the public. In the month that the program has been available, many have described it as being a great alternative to the 30-year option because it allows individuals to own more of their house a lot more quickly and save money on interest because the debt is paid off in half the time.
"The WBHL is a straight, broad highway to debt-free homeownership," stated the public policy think tank American Enterprise Institute.
As many people who have experience with mortgages well understand, organizations like Fannie Mae and Freddie Mac already offer 15-year mortgage terms. But what separates the WBHL from these types is that the loans are usually lower priced. For example, to help lower the interest rate, those who take advantage of the WBHL can pay money up front through a system called "paying points," NPR reported. Some individuals who have taken advantage of this have seen their interest rates drop to less than 1 percent.
"Yeah I really thought that it was unbelievable," Kimberly Wright of Memphis, Tennessee, recently told the news agency regarding the WBHL. She stated that she felt compelled to call her loan consultant at the Neighborhood Assistance Corporation of America, incredulous as to how much money she was saving.
NPR noted that while the WBHL program is usually the best deal in the long run, mortgage owners should be aware that they'll likely spend more each pay period than they would with a 30-year loan plan. So it's important to fully assess one's financial situation in the decision process.
Mortgage applications up sharply
Perhaps in light of mortgage rates being in affordable territory, application activity has risen in recent days. Loan requests increased more than 5.5 percent for the week ending October 10 from the previous seven-day period, according to new data released by the Mortgage Bankers Association.
Mike Fratantoni, MBA's chief economist, noted that mortgage rates for most loan products have dropped to their lowest level in more than a year, which has helped spur the growth in application volume.
In addition to filling out an application, many lenders require that a home insurance plan be secured. Applicants may also need to provide proof of employment and a credit report.