Does a 30 year loan seem daunting to you? Making you hesitate to refinance?
Refinancing to a lower interest rate doesn’t necessarily mean you need to start the 30 year clock all over again. If you are not looking for payment relief, then keeping your same payment after you refinance can be a great way to pay your loan down faster while paying thousands less in interest over the life of your loan.
It’s pretty simple.
Lets say your loan is $400,000 at 7% interest and your monthly principal and interest payment is $2661.21/month.
Over 30 years you will pay approx. $558,000 in interest.
Now lets say you refinance your $400,000 loan to 4.5% interest which would make your monthly payment of $2027/month.
If you were to keep your monthly payment the same, $2661.21/month, you would be paying your principal down an extra $634/month. And your savings would be astronomical…
Over the course of this loan you would be paying $189,693 in interest AND pay your loan off in 18.5 years.
That is a total savings of $368,307 and 11.5 years!
And that folks is how you can turn your pennies into thousands – just by simply refinancing.