What sense would it make to have a fixed 30-year interest rate of 5.5% on your present mortgage and then change it to a fixed 30-year rate at 6.25%?
On the surface that sounds silly. You are clearly going backwards. However, there may be exceptions to the rule. For example, what if someone had a payment of $1000 per month on the mortgage, but also had payments of $800 per month with other debt, like a car payment and a couple of credit cards? If we could show that customer a way to cut their payments from $1800 per month to $1400 per month, how are things sounding now? Then, if we took it one step further and shortened the term of the 30-year mortgage to 25 years, which sould save several thousands of dollars in interest, are we making things even more interesting?
My point here is two-fold. If someone has a great interest rate and has no other debt, then it would be foolish to refinance to a higher interest rate. Even if the term were shortened it wouldn't make sense. You can always take a 30-year mortgage and calculate how much more you can add each month to shorten the term yourself, without the expense of refinancing.
However, a large percentage of the population is not fortunate enough to have only a mortgage debt. I know I am not one of those lucky ones. So, ca we look in the mirror and say to ourselves, "How do I swallow my pride or check my ego at the door to take a step backwards?" I say let's forget about the step backwards and focus on the two steps forward we are about to take. If we can clearly show you how you can save money each month and save you interest over the life of the mortgage, we should be willling to look at that option.
I do warn, however, that the concept needs to be well thought out and explained properly. Numbers never lie, so if a professional mortgage consultant can take the time and explain the numbers, the results will either clearly make sense or they won't
Middlestead Mortgage's staff is highly trained on this concept and can provide you with a professional and accurate consultation. We will never do a loan just to do a loan. If it is not in the customer's best interest, then it is not in our best interest to do the transaction. Please feel free to contact a mortgage consultant to review your own personal situation.
skip to main |
skip to sidebar
Blog Archive
About Me
- Jeff Middlestead
- President, Mortgage Loan Consultant & Licensed Life Insurance Agent Middlestead Mortgage
PROFESSIONAL PARTNERS:
Ryan Schmitz
Besaw & Associates
(920) 964-3926
View Ryan's Real Estate Blog: http://www.ryanschmitzrealtor.blogspot.com/
Besaw & Associates
(920) 964-3926
View Ryan's Real Estate Blog: http://www.ryanschmitzrealtor.blogspot.com/
2 comments:
What do you think about bi-weekly mortgages? I've heard it can save a lot of interest, and shorten the length of the loan.
Bi-Weekly payments are a great idea. You can do it one of three ways. Typically, you pay half of your mortgage payment every other week. What this does is actually make one additional full payment each year. That additional payment is used to reduce your principle balance and saves you interest over the course of your mortgage. You can also add 1/12 of your payment each month to your already scheduled payment. In other words, if your principle and interest payments are $1200 each month. You can add an additional $100 per month and have the same effect as bi-weekly payments. The last option to get the same affect is to pay one extra payment per year. Pay $1200 at any point in the year and you will basically be doing the same thing as paying bi-weekly or adding $100 per month to the payment above.
Post a Comment