When you’re considering a mortgage refinance or recasting of any kind, here are a few tips to save even more money than you thought.
Refinancing could save tens of thousands of dollars but there are ways to increase your savings even more! Ask about recasting your mortgage.
Many lenders won’t tell you this but you can restructure (recast) your mortgage at a lower rate. With some simple paperwork and about $250 you could get a lower rate and payment without adding all the extra refinance fees.
If your lender won’t recast the loan and offers a standard refinance instead, get credit for the years you’ve already paid. At $2,000.00 per month you already paid $24,000.00! So, ask for a 28-year mortgage and you won’t end up paying 2 years over again. If your bank won’t do that, do it yourself by prepaying the loan on a 28-year schedule.
Another way to save big is to keep making your old payment. Refinancing a 30-year loan into a 15-year loan can drastically reduce your cost of interest but maintaining your original payment can fast track your mortgage and shorten it another 3 years or more.
Finally, maybe you shouldn’t refinance at all. You may have already paid a big portion of the interest on the mortgage. Since interest on mortgages is heavily weighted into the beginning years (front-end loaded), it may not make sense to refinance since your current payment is mostly principal. So, you see, the savings is not just in the payment – there can be more to it than that. Hopefully these ideas will be helpful in saving you much more money than you thought possible.