The Benefits of Mortgage Refinancing
I came across a nice reference to mortgage refinancing today in this week’s BusinessWeek. The columnist David Kiley discusses several ways in which his family has tightened its budget, including getting rid of their personal financial advisor and switching to in-network healthcare providers.
They made a smart decision to make two smaller mortgage payments per month, instead of the typical monthly payment. This switch will result in an additional month’s worth of money being paid annually to bring down their debt. It will also reduce the length of time it takes to pay off the mortgage, going from 27 years down to 22 years. That’s five years taken off the mortgage right there, and a savings of $77,000 interest. Damn. The couple was also able to lower their interest rate from 6% to 5.12% with zero fees or closing costs, for a reduction in fees of $212 a month…
In summary, this guy refinanced and modified his payments to take five years off his mortgage, saved himself $77,000 in interest payments, and lowered the money he shells out every month by $212.
To read the whole article, see Recalculating the Family Budget - BusinessWeek
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