Tuesday, June 21, 2011

How to Save $16,000

We keep talking about refinancing our home loan.  Rates are really going down.  I think our loan was at 7.5% when we first built the house, and we've refinanced a couple times over the years as rates continued to fall.  We're currently at 5.25%, but I just checked the rates on our bank's website last night, and a 15-year fixed rate mortgage is at 3.75% right now.  We've been paying on our mortgage for 13 years now and paying a little extra each month - enough to equal making two extra payments a year - so, continuing as we are, we could have the house paid off in about 14 years.

So why refinance? If we refinance to drop the interest rate, our payment doesn't change much at all, and if we continue paying extra every month, we can have the house paid off two years earlier and save $16,000 in interest.  Wow!  It will cost us about $900 to do it, but I'd say it's worth it - and we really should have done this earlier.  Of course, I don't remember what the rates were last fall when I went to the bank to get the insurance checks taken care of.  Maybe they were lower; maybe they were higher; but that really doesn't matter.  What matters is now.

If you think you might be paying more interest on your mortgage than you need to, now might be the time to look into refinancing.  You can check out FHA Streamline Refinance to easily find out how much you could save.  Enter your mortgage balance and current interest rate to get a free quote.  If you already have a VA Loan or FHA (Federal Housing Administration) Loan, you're already approved, there's no additional paperwork, and there are no out-of-pocket costs.  The process is quick and easy - that's why it's called Streamline.  If you don't have a VA or FHA loan, there are options for Conventional Streamline Refinance too.

I'm not saying you'll save $16,000, but it's worth checking out.  You might be able to pay your house off sooner or lower your monthly payments so you have more money for other expenses.
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