You Have Nothing to Lose with a Refinance
A recent borrower we worked with bought a townhome 18 months ago with a 4.75% rate. After running the numbers we found that we could refinance to drop her rate down to 2.625% and save her $350 per month.
At first she was super hesitant to do the refinance because she was only planning to live in Utah for another 2 years. She was interested in the idea of keeping the property as a rental when she moves out of state but had not fully made up her mind yet.
She spent hours running numbers this way and that to work out if refinancing would benefit her long term
For me it was a super easy decision because her breakeven point was only 10 months. Meaning that 10 months of saving $350 paid all of her refinance costs. She is definitely staying in Utah for another 2 years so she will save $350 every month after month 10. And if she does decide to keep the property and convert it to a rental down the road she is in a much better position to have cash flow.
She had nothing to lose with this refinance and in the long run it saved her thousands.
If you are wondering what a refinance could do for you, give me a call.
I'd love to price out some scenarios to show you what potential savings a refinance could provide for you.
Firstly, we have Brandon. Brandon’s goal is to buy a new house in a few years and convert his current one into a rental. He wanted to lower his current mortgage payment so that when the house is converted to a rental, there will better cash flow. He reached out to see what we could do to secure him a better rate and lower his monthly payment.
His original loan began back in July 2019 with a rate of 3.75%, a monthly payment of $1,358, and total interest over the life his loan was set to be over $143,000.
After running the numbers, we found that we could refinance him into 29-year term and not have to reset his mortgage with another 30-year term. We got him an amazing new rate of 2.82%, his monthly payment dropped to $1,267 and his total interest over the life of the loan decreased to $101,491.
Thanks to the refinance Brandon now plans to pay off this house before he is 60 so he can use 100% of the rental income to supplement his retirement income.
What a fantastic plan that we are happy we were able to help him set into motion!
Our second borrower, Shelly, was referred by her brother in law after he told her how much she could save by refinancing into a 15-year loan with me.
Shelly originally bought her house in 2017 with FHA rate of 3.875% and a monthly payment of $1,670. Being in an FHA rate meant she would be paying mortgage insurance on top of her interest charges for the life of her loan. That put the total interest over the life of her loan over $166,000. The only way to remove mortgage insurance is to refinance.
At first, she was really skeptical and did not think it was possible. However, there was no reason for her be nervous because we were able to get her a great new loan!
Shelly was able to refinance into a conventional loan with a 5-year fixed rate of 2.625%. Her new monthly payment was $3 higher than her original payment, but she shaved 12 years off her new loan and after removing the mortgage insurance we were able to lower her total interest paid over life of loan to $45,541.
This refinance was able to save her about $121,000 in interest charges! Her house value went up, now at an 80% loan value with no mortgage insurance.
Shelly is only 37 years old and is beyond excited that she is now set to have her house paid off before she turns 52! This completely changes her outlook on her retirement.
Both borrowers had completely different stories and completely different loans, but one thing in common; they both needed a refinance option that would help them achieve their financial goals.
