We just refinanced. And no, it wasn’t a 10 point drop in interest rates, either. The secret to our savings is reducing the term of the mortgage. We went from a 15 year mortgage to a ten year mortgage. Our original mortgage would have cost us more than $46,000 is interest over the 15 year term. Our new mortgage will cost us less than $17,000. And the most amazing part of it is our payment will only go up about $150.
When I work with buyers, I am always amazed that they will fight till the bitter end and sometimes walk away from a purchase in which we are maybe two or three thousand dollars apart in price. But then they will get a 30 year mortgage with minimum down payment and end up paying the bank almost as much in interest as they pay the seller for the house.
I don’t dislike banks. If the only house I could buy was one I could afford to pay cash for, well, I would not be a happy camper. And if I could only sell real estate to individuals that can afford to pay cash, I doubt I would sell very many houses. Banks are good and mortgages are great but we should only finance what is necessary. After all, I’d much rather see that $20,000 go towards my vacation than the vacation of some banker!
By the way, interest rates are extremely low, making it a very attractive time to either buy real estate or refinance. Don’t hesitate to give me a call for more information. My office number is 756-7457.