A CFP® professional meets with two new clients who would like advice about their mortgage. In the review, the CFP® professional finds that their essential expenses exceed their income. Mortgage rates have come down significantly and they intend to refinance their current 30-year mortgage to a 15-year mortgage. Their payments will be higher than their current payment. However, they will pay off the mortgage 5 years earlier than the current amortization schedule allows. What should the CFP® professional do?
- Suggest they stay with their current mortgage, as the higher interest is tax deductible
- Suggest they refinance to a 30-year fixed mortgage and begin funding savings
- Suggest they refinance to the 15-year mortgage, which would reduce the amount of interest paid over the life of the loan
- Suggest they meet with their mortgage broker