SO YOU JUST REFINANCED your fixed-rate mortgage within the past six months. Maybe you knocked a half point or more off your interest rate, lowering your monthly payment to leave more money in your pocket for other monthly expenses or savings.
Let’s say you previously had a 20 year fixed-rate loan with a balance of about $175,000 on your home at 5.3875%. You’d been seeing much lower rates out there and wanted to take advantage of a great opportunity to save money, but were either too busy or didn’t see a low enough rate to warrant taking action. Or maybe you assumed that the closing costs would be more than you wanted to pay and it would take too long to recoup the up-front investment.
Then you spoke to a great Mortgage lender who explained to you that you could lower your rate to 4.25% with no closing costs, knocking thousands off the cost of your loan over time and reducing your monthly payment by about $30. So you gather together a bunch of paperwork, fill out some forms, close on your new loan and enjoy your savings.
Then about 5 months after you began the re-fi process, your lender calls you and suggests that you refinance….AGAIN! With no closing costs. Most of the paperwork is still on file with the lender; you probably just need to produce current pay stubs and a few other miscellaneous items, and then fill out more papers and attend another closing.
At this point, your interest rate is 4.25%, and you have a little less than $175,000 left on your mortgage and maybe a small 2nd loan, such as a home equity line of credit with a balance of a few thousand dollars. About $80,000 of your remaining loan is interest.
You learn that you can qualify for a 20-year fixed loan at 3.75%, which would eliminate nearly $8,000 in interest over the life of the loan, and further reduce your monthly payment by about $65. With NO CLOSING COSTS. You also are able to subordinate the balance of your home equity line of credit, rolling it into your new mortgage, just as you did when you last went through the re-fi process. For no cost, other than the expense of time you devote to some paperwork and file gathering.
Yes, there is a lot of stuff to do around the house that you want to get to….painting the garage, refinishing the front porch steps, cleaning out the basement and selling a bunch of obsolete stuff on craigslist, etc. etc. There is always a myriad of tasks, projects, chores and other diversions that can serve as convenient excuses to put off this type of opportunity. But then you realize….you could buy the paint and other supplies with a couple months of savings from doing another re-fi! $65 dollars per month could pay for lots of things! In our family’s case, it would pay for about 6-7 hours of ice time for our daughter, the competitive figure skater. It could even buy you a nice dinner for the family to celebrate your new lower monthly mortgage payment! Ask me how you can accomplish this; I can point you in the direction of a great lender who can get the job done for you!
Now, about that peeling paint on the garage….