For example,
if you have a $150,000 mortgage at 8.5% amortized for 30 years the monthly
payment for principal and interest is $1,153.37. After 3 years, your mortgage
balance is $146,288 approximately, assuming no prepayments and no missed
payments. If you refinanced $150,000 at 6.875% for 20 years the principal
and interest payment would be $1,151.72. Only a few dollars different than
the current payment.
Now look at the following chart comparing principal balances on these loans.
Beginning balance on the 30 year loan is $146,288 because 3 years have already
been paid. Beginning balance on the 20 year loan is $150,000.
 |
30
Year |
20
Year |
| *Balance
after 5 more years: |
$137,567
|
$129,137
|
| *Balance
after 7 more years: |
$132,903
|
$118,573
|
| *Balance
after 10 more years: |
$124,246
|
$ 99,746
|
| *Balance
after 15 more years: |
$103,902
|
$
58,337 |
| *Balance
after 20 more years: |
$ 72,829
|
0
|
By reducing the rate
and term, thousands of interest dollars are saved and at the same time, equity
is created more rapidly with almost the same principal and interest payment
because more of the payment is applied to principal on the 20 year loan.
Let us analyze your mortgage circumstances. This may be a great alternative
for you. Let's look at the numbers and find out.
*DISCLAIMER: The calculations
performed on this page are mathematical estimates.
There is NO WARRANTY, expressed or implied, for the accuracy of this information
or
it's applicability to your financial situation. Please consult your
own financial advisor
before making any financial decisions. |
|
|
