I have just completed and mailed the paperwork necessary to lower the interest rate on our current mortgage.
As I mentioned just a few days ago, my wife and I have been considering refinancing our mortgage. Interest rates on a 15-year fixed-rate mortgage are significantly lower now than they were when we financed our home nearly three years ago, so we decided to do some research.
We contacted several mortgage lenders and brokers – and were impressed by the rates we were offered. I was hesitant, however, to go ahead with the refinance, for three reasons. First, I really didn’t want to deal with the paperwork and documentation required for a refinance. Second, I really, really didn’t want to start over with a full, 15-year mortgage. We have worked hard to pay down our mortgage – and giving up nearly three years of progress just didn’t sit well. Third, I really, really, really didn’t want to pay thousands of dollars in closing and other costs.
I remembered reading an article about recasting a mortgage and wondered if we might be able to do something similar. I contacted my current lender and asked them if they offered an in-house refinance – one that would lower my interest rate but not change any of the other terms of our mortgage. I talked to a customer service manager – and she quickly emailed me with an offer.
The interest rate on our mortgage will be lowered by 1.525%!
Over the life of the mortgage, we will save thousands of dollars in interest – and – if we continue to pay our “old” payment on our “new” loan – we’ll save on interest and pay off the mortgage sooner. Win – win.
We did have to pay a processing fee, via certified check. It will take about 7 months in saved interest to cover the cost of the fee, but after that, we’ll be ahead of the game.
The paperwork was rather straightforward. My wife and I had to sign the new agreement, have it notarized, and overnight it to our lender. It should arrive by tomorrow and we should be good-to-go for our September payment.
One note – This was not a government-sponsored loan modification or some other hardship-modification. This was a simple, in-house loan re-amortization and was available because we have made all payments, on-time, and maintained good credit.
I’ll let you know if we hit any snags in the next day or so – and tomorrow I’ll have an update on our current mortgage payoff progress. Rock on.