Home Loan Refinancing has big benefits

Home loans refinance

Mortgage rates continue to remain very low and it is a great time to refinance. Most people understand how a homeowner can refinance to a lower interest rate and payoff their loan faster by applying the monthly savings to principal reductions. However, I want to call out something even more important. The monthly payment savings does not show you your monthly interest savings. Why is this important? If you focus only on the monthly payment savings from interest rate reduction, you are missing the true interest saving benefit.

We often hear customers focus only on “what is my monthly savings”. We want our customers to understand the benefits of refinancing can lower your loan balance at a much faster period…we are talking months not years! Therefore refinancing can be a benefit even in the short term.

Amortization schedule

Your Current Loan Example:

$200,000 loan 5.5% – 30 years

Example with

Todays Low Rates

$200,000 loan 4.25% -30 years

In this example if you took your monthly payment savings of $151.70 and applied it as a principle reduction you loan balance would be $3828.65 lower with just 18 payments; that is pure interest savings. Also notice the interest portion on the first payment is $208 difference. If you take your monthly savings and apply it towards principle, at the end of 10 years you would have saved over $28,000 in interest.

I have many different loan programs available to cater to each customer’s unique situation. Perhaps you have heard your debt to income was high, your appraisal came in low, or maybe the bank gave you no reason why they turned you down. Our rates are low and our underwriting guidelines are not as tough. If you were turned down for a loan before, call us and let us review your situation.

 

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