#refiance

[emortgagecapitalinc]

Working on a home renovation, but need more money? Getting a refi can lower your monthly payments meaning more cash in your pocket. Call us today!

[marinafinancial-blog]

"REFINANCE-TO-PREPAY"

One way to reduce your mortgage interest paid. It's called "refinance-to-prepay".

Refinance-to-prepay is exactly what it sounds like -- you refinance your loan to a lower rate then prepay on your new loan. With refinance-to-prepay, you get access to current mortgage rates, and a quicker amortization schedule.

Here's how to execute :

Refinance to a lower rate on your same mortgage program (e.g. 30-year fixed)

Apply your entire monthly savings to your new loan monthly as "extra payment"

Keep doing this until your loan is paid in full

The refinance-to-prepay system works because, although your mortgage rate is lower, you're making the same payment to the bank each month. You're paying less interest because of your lower rate and your sending bonus principal monthly.

When you refinance-to-prepay, your loan will "restart" to 30 years, but you'll ultimately pay it off faster than had you never refinanced at all. It's a math fact.

Here's a real life example of how refinance-to-prepay work.

Say your current loan balance is $400,000 and you're refinancing from the 4.75% mortgage rate you took two years ago to a zero-closing cost 4.00% mortgage rate available today. After the refinance, your payment will be $246 less per month.

Simply take that $246 savings and send it to your lender each month along with your "regular" payment.

Your "new" 30-year loan will pay off in 24 years. This is 4 years faster than if you hadn't refinanced at all. Those four years of making "no payments" save $90,000.

Even with closing costs, the maths works out. You're spending a little, and saving a lot.