We have been working hard to pay off our 15 year fixed-rate mortgage. Recently, mortgage rates have dropped to all-time lows. Our current loan is already at a low rate, but my wife and I feel that now is the time to refinance.
I did some research and was amazed by some of the rates that I found. I contacted three mortgage providers and three mortgage brokers. One of the providers was from a large, national company. The other two providers were from smaller, regional companies. The three brokers were all from my home state, and all had access to both national and local lenders.
I was impressed by the rates and options that we were provided – but I didn’t like the idea of our mortgage “resetting” to a full 15 years. We’ve already worked so hard to pay off those first 2+ years. In fact, we have already chopped an additional 5 months off of the length of our mortgage.
So, I called our current lender and was rewarded with a very pleasant surprise. They were able to offer an in-house solution. Instead of refinancing for 15 years, our lender will simply reduce the interest rate on our current mortgage. We’ll pay a one-time paperwork processing fee which will be much less than the thousands required for a full refinance. Our interest rate will be reduced – our monthly payments will be reduced – and our mortgage length will not increase.
Basically, they offer an in-house loan modification program which re-amortizes the loan – at a new, lower rate – without changing the terms of the loan. This is not a government program. Some sites also refer to this as a portfolio modification.
We have to wait until our August payment clears, sign a few documents, send in a cashiers check for the processing fee, and we’ll have our new rate, but same old mortgage, in September.
For those wondering, we managed to reduce our current rate by more than 1.5% – and we’ll pay for the cost of the processing fee in less 6 months.