Refinancing Into a Lower Term Mortgage Can be a Great Investment
Everyone wants a great high yielding and low risk investment opportunity, but seldom does one think of a home mortgage in that light. Yet, for many homeowners, refinancing into a lower term mortgage can be a great long-term investment strategy, especially when refinance rates are as low as they are currently.
For instance, suppose you currently have a 6.5% 30 year fixed rate mortgage that you took out 2 years ago. The total interest on that loan over the entire term of the loan amounts to $318,861, of which you have already paid $32,000.
Now, if you refinanced into a $250,000 15 year fixed rate mortgage at 4.5%, the total interest on your new home loan would only amount to $94,247 over the 15 year term.
So lets recap. The 30 year interest of $318,861 less the $32,000 already paid less the $94,247 total interest for the 15 year fixed mortgage results in a net interest savings of $192,614 by refinancing to the 15 year option.
Now you might say that is better than grits and gravy, but the payment goes up. In this example the monthly payment would increase by $332.
Most people scoff at the idea of increasing their mortgage payment, but I would suggest that you consider it an investment and a Great Deal!
Think about it. We may never see the current historic low interest rates ever again after we dig out of this national economic mess.
In this example, which is pretty typical, the homeowner would be investing in a sure $192,614 profit by paying an additional $322 per month into their own home! Better yet, the IRS is not going to take 50% nor 28% nor 15% of that profit …. Wer’e talking a tax-free investment!
I don’t know about you, but I seldom run into such safe and prosperous tax-free investment opportunities.
Not to mention that your mortgage paying days will be over in 15 years as opposed to 28 years. For those in their 20’s, that may not seem like an issue, but the prospect becomes much more important to those over 30 years old.
All that said, there is a risk to this investment strategy. If you cannot make the increased monthly payment, then you can run into a major problem and possibly risk losing your home.
It is ultra-important that you can make the increased payment comfortably. Even if the qualifying debt ratios say that you are good, you need to make a real-world assessment considering your current employment and monthly budget.
If the budget checks out, then you could be on your way to making one of the best investment decisions of your life by refinancing into a shorter term home loan while mortgage refinance rates are so low.
If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
For instance, suppose you currently have a 6.5% 30 year fixed rate mortgage that you took out 2 years ago. The total interest on that loan over the entire term of the loan amounts to $318,861, of which you have already paid $32,000.
Now, if you refinanced into a $250,000 15 year fixed rate mortgage at 4.5%, the total interest on your new home loan would only amount to $94,247 over the 15 year term.
So lets recap. The 30 year interest of $318,861 less the $32,000 already paid less the $94,247 total interest for the 15 year fixed mortgage results in a net interest savings of $192,614 by refinancing to the 15 year option.
Now you might say that is better than grits and gravy, but the payment goes up. In this example the monthly payment would increase by $332.
Most people scoff at the idea of increasing their mortgage payment, but I would suggest that you consider it an investment and a Great Deal!
Think about it. We may never see the current historic low interest rates ever again after we dig out of this national economic mess.
In this example, which is pretty typical, the homeowner would be investing in a sure $192,614 profit by paying an additional $322 per month into their own home! Better yet, the IRS is not going to take 50% nor 28% nor 15% of that profit …. Wer’e talking a tax-free investment!
I don’t know about you, but I seldom run into such safe and prosperous tax-free investment opportunities.
Not to mention that your mortgage paying days will be over in 15 years as opposed to 28 years. For those in their 20’s, that may not seem like an issue, but the prospect becomes much more important to those over 30 years old.
All that said, there is a risk to this investment strategy. If you cannot make the increased monthly payment, then you can run into a major problem and possibly risk losing your home.
It is ultra-important that you can make the increased payment comfortably. Even if the qualifying debt ratios say that you are good, you need to make a real-world assessment considering your current employment and monthly budget.
If the budget checks out, then you could be on your way to making one of the best investment decisions of your life by refinancing into a shorter term home loan while mortgage refinance rates are so low.
If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.
May the Mortgage Refinance Rates be with You!
Refinance Tool Box
Labels: business, economy, finance, home loans, money, mortgage rates, refinance, refinance rates, refinancing
posted by Jim Bisnett at
11:25 AM
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