Call if your rate is over 3.125%
Q: My family member is in a related business to yours and commented that it might not be worthwhile to refinance our $400,000.00 (currently at 3.875%) because we have had the loan for 18 months and should not go back to 30 years. What is your response to that?
A: it always makes good sense to lower your rate at no cost. How much sense it makes depends only on the difference in rate. In your case lowering the rate by .75% to 3.0% APR from 3.125% APR (exact rate depends on loan to value and credit score) makes MASSIVE sense! You can save approximately $240 per month by going back to 30 years, you can save up to $172.00 per month by staying at 28.17 years or you can pay off years early by lowering the rate at NO COST and continuing to make the same payment you are making now. So you can save a pile of money at zero cost by 1) going from 28 years to 30 years and increasing your monthly cash flow by $240.00; 2) by staying at 28 years and making a payment that is $175 per month lower or 3) you can pay off early by lowering your rate at no cost and continuing to make the same payment you are making now. You did not ask about pulling CASH OUT—but you could pull out a pile of cash and, with a lower rate at NO COST, you could keep making the same payment you are making now while putting cash to work in the area of home improvement, investment or other life goals. Every one of these options saves you thousands over time and every option has ZERO DOWNSIDE—except if you pull cash out and throw it away by not allocating it wisely.
I would encourage anyone with an interest rate at or over 3.25% and anyone who has had their loan regardless of rate, for five years or more to give me a call to see what options you may have that you are not aware of. NOW is a great time to take advantage of THE LOWEST MORTGAGE RATES IN HISTORY. Let me show you ALL OF YOUR POSSIBLE OPTIONS and you may be surprised at how many good ones you may have that you are not yet aware of.