Save $1,000’s by Refinancing Your Mortgage to a Shorter Term.
Time to Refinance??? A case study of Mortgage Term 30 Year vs 20 Year.
Refinancing with a 20 year mortgage does make sense. When refinancing you want to take a look at monthly payments, percentage rates, term of loan and then at total cost of loan and total interest payments of loan. If you take a look at the example down below you can see that with simply lowing your interest rate by 1% you can save thousands of dollars. If you lower the length of time (term of your loan) of the loan you can also save thousands of dollars over the course of the loan. Check with your local Mortgage Broker, Mortgage Banker and Lending Institutions because usually a 20 year mortgage tends to be a 1/8th of a point lower than a 30 year mortgage.
The case study below is a refinance of a 30 year $400,000 loan after 6 years of paying the original loan that resulted in refinance principal of $363,752. The example includes principal & interest payments (P&I), taxes and insurance payments are not accounted for. Whenever considering a refinance you should consult your personal Certified Financial Planner (CFP) and Certified Public Accountant (CPA) for your individual needs and situation.
** The Principal & Interest Total and the Interest Total is if you keep the full life of the mortgage from start to end.
*** If you keep the original 30 year mortgage at 5.5%, over the next 24 years your Total Principal & Interest payments will be approximately $654,094.
For more information and tips on shopping for mortgages see below:-
8 Ways to Reduce Mortgage Closing Costs ~ WiseBread Article Oct '13.