Let Me Count The Ways You Can Pay Less and Keep More

In a low mortgage rate environment, there are many ways to skin a mortgage
so that you pay less and keep more in your bank account, rather than add to
the big super mega banks profits.

And that, even if you already have a low mortgage rate.
I’ll cover that in the next posts.

Here’s a couple ways to save:

1)  Most people refinance a Fixed 30 to another Fixed 30. That starts the 30 year clock
all over again. In some cases that is fine. Did you know you can reduce your Fixed 30
rate to a shortened term of 25 years? The payment is increased slightly and you will
stay even or ahead of your current amortization.

It’s like a savings account you don’t have to think about. I had a rental property on a
Fixed 25 year loan, and it is amazing how  small changes can make big differences
in loan balance reduction.

This is especially powerful if you have had your current mortgage for less than 5 years. 
There is not a break for a lower interest rate for a Fixed 25. it is the same rate as a Fixed 30.

2)  Reduce your Fixed 15 to a Fixed 10 year mortgage.  I’ve been surprised how significant
this is in interest savings, even with clients that are 6-9 years into their loan. It doesn’t work
for all Fixed 15 year mortgages, but the numbers are worth crunching.  Depending upon your
loan size, you may also be able to do a “no cost” refinance.

3) Reduce Fixed 30 to a Fixed 20. Right now it’s easy to do this with a “No Cost” refi. Payments
may increase but total savings are dramatic, especially if you will be in your home
another 5-10 years.

4)  Did you know that most Adjustable Rate Mortgages (ARMs)  can be amortized for 10, 15, 20, or 25 years?  If you combine the low ARM rates with a shorter term, you will have even faster mortgage pay down.

Why would you consider an ARM rather than a Fixed?  If you knew you were going to be moving in “X” amount of years.

5) If your end result is to lower your monthly payments, you can also switch to a mid-term ARM.
They are ridiculously low right now and in most cases you can have low to no closing costs.

Since mortgage rates have been so low for so long, it’s easy to be lulled into thinking they will stay that
way for ever, and miss opportunites to keep more dollars in your bank account.

With the right strategy, you can take advantage of low rates now, and lower rates again at the
next drop.  But you have to plan ahead.

Do you have questions or a real life scenario to analyze? Let me know in the box below.