Historically low mortgage rates are allowing millions of homeowners to slash their monthly payments by hundreds of dollars. They’re also allowing a different group of homeowners to add hundreds of dollars per month. Confused? Mortgage refinancing with a shorter term length allows you to pay down the principal balance of your mortgage at an accelerated rate. Here’s an article from Bloomberg.com that explains the advantages of choosing a mortgage refi with half the term-length:
While millions of U.S. homeowners have negotiated lower monthly mortgage bills in an effort to avoid foreclosure, Cecelia Kirchman happily added $250 to her payment when she refinanced last August. Kirchman took out the new loan to reduce her interest rate to 4.5 percent from 7 percent, and slice the term in half to 15 years. She said she has paid down more principal in the past 10 months than in the previous six years of owning her home in the suburbs of Washington, D.C.
Once you’ve decided to go forward with mortgage refinancing it’s important to focus on the fees you’re paying for mortgage loan origination and closing costs. Getting the best refinance rates in today’s market is easy; however, the challenge is minimizing fees, which vary incredibly from one lender to the next AND are negotiable.
One of the most common mortgage mistakes is overpaying at closing. You can learn more about getting the lowest mortgage refinance rates for your next home loan without paying junk fees by checking out my free Underground Mortgage Videos.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
