Frisco Texas Mortgage, Real Estate, Events, and more

Save over $22,000 - Don't worry, I am not selling you anything.

That's right, you can save THOUSANDS of dollars.  I know, sounds impossible and you are waiting for the punchline or for me to tell you to invest in something that will have huge gains.  Nope!  That's not my job, but I am sure there are plenty of posts and/or infomercials that will take care of that for me.

 

This post was sparked from phone calls I received from new and previous customers.  Yes it is true that rates are still at an all time low.  But does that mean you need to refinance?  Well, that is not always the case.  What??  A mortgage consultant telling you it may not make sense for you to refinance?  Yes and No.  When I am talking with someone about refinancing, I look at many different aspects.  Obviously we are going to talk about credit so we can assess your current situation.  This post is not about Credit though.  If you need to review your credit though, take a look at my previous post which talks about getting a free credit report.

 

When I consider someone for a refinance, I look at their current loan balance, the term they want compared to how much time they have left, and their credit score.  Right now, more than ever, your credit score is a major driver of what interest rate you will receive.  So, let's look at a scenario where you can save yourself some thousands of dollars without refinancing.

It may not be possible for you to increase your monthly mortgage payment due to current cash-flow, but if you can that will obviously help.  Most mortgages permit you to make additional payments to your principal at anytime.  Perhaps you receive a larger than expected tax return, or an inheritance, or a non-taxable cash gift.  You could apply this money towards your loan's principal, resulting in significant savings and a shorter loan life.

Let's use the following example:

 

  • Loan Balance $100,000
  • 30 year fixed rate
  • Current rate 6.5%

 

In this scenario, the borrower would pay a total of $227,542.98.  This is the total of all payments made over the next 30 years.  That equals $127,542.98 in interest payments.  I know that is a crazy number (for reference, this number can be found on your Truth In Lending Statement).

If the same borrower makes a one-time $5,000 payment the first day of year 6, he/she will pay a total of $204,710.75 and pay off the loan in 27 years (324 months).  This shaves off 36 months of payments with a savings of $22,832.23 in interest.  Paying a principal reduction in year 6 means nothing, except it worked into my scenario nicely.  You may make a principal reduction in year 2 or year 12.  The point is to make the principal reduction and you are guaranteed to save on interest.

So... what are you going to do with YOUR tax return this year?      

If your principal balance is over $150,000 and you are paying over 6% on your mortgage, you should call your local mortgage consultant.  It costs nothing to find out what options are available to you (in most cases) and could save you a ton of money.

You are also welcome to visit my website www.TXMortgageConsultant.com and use the mortgage and budget calculators to see your own savings scenario.  No sign-up required and no one will follow-up with a phone call.  It is set up for your use only.  If you live in Frisco Texas or the surrounding areas, give me a call and I'll be happy to do some comparisons for you.

 

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Are you looking to purchase a Texas home?  Perhaps you love your Texas home but would be interested in refinancing your Texas mortgage to a lower interest rate?  

I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice.  If you are available to talk, I am available to listen.  Give me a call or visit my website for more details.

Do you want to know all of your mortgage options? Call me today and let's discuss them further.

Texas Home Loan Consultant

Always available for your Texas Mortgage and Home Loan needs!

John R Cannata    P#214.728.0449

NMLS # 322646

Texas Home Loan Expert

Frisco TX Mortgage

      

 

The views expressed on this site are mine alone and do not reflect the views of my employer.

Comment balloon 7 commentsJohn Cannata • January 22 2009 11:31AM

Comments

Also of note John, is that you can increase your monthly payment by 1/12 of a payment and pay your loan off about 6 years earlier.

Posted by Fred Chamberlin, Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant (Guild Mortgage Co - Oak Harbor WA) over 9 years ago

Excellent point Fred.  Thank you for adding that detail.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) over 9 years ago

I just love you financial guys.  I thought you were going to talk about dividing your payment into two parts each month.  Great information to pass on.

Posted by Brenda Harmon (Century 21 Beal, Inc College Station, Texas) over 9 years ago

John, In better times I use to recommend this to my clients all the time. Money seems to be a lot tighter now and that extra payment seems to be going somewhere else...

Posted by Paul S. Henderson, REALTOR®,CRS,, Tacoma Washington Agent/Broker & Market Authority! (RE/MAX Professionals.) over 9 years ago

Brenda - For MOST mortgage today, you can pay on the 1st and 15th of each month but it will never save you a dime.  The reason is that most lenders wait until the full payment is received and then they apply it all as one payment.  There are only a few lenders out there that will actually apply a partial payment so that ultimately it saves you on interest.  Those same lenders will let you send in a payment every other Friday.  That is equivalent to paying 13 payments a year instead of paying 12.  It will save you money, but they payments are still not being applied until a complete/full payment is received.

Paul - Thats what wrong with our society today.  We spend it before we really have it.  When we get a raise, we increase our expenses.  At some point in time, the increase and expenses went up together... strange how that happens.  Those same individuals need to listen to Dave Ramsey.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) over 9 years ago

John - Too many people don't know or understand what their options are.  They occasionally have the opportunity to improve their lives by making a good financial decision, but are often oblivious to the situation.  I hope that some of these people find you and your posts, so that you can help them out.

Posted by Erik Hitzelberger, Louisville - Middletown Real Estate (RE/MAX Alliance - Louisville REALTOR-Luxury Homes) over 9 years ago

Hey Erik.  I hope so too.  Its important to know what is going on with your credit.  Even if you are suppose to have no credit.  Too much fraud and too much erroneous reporting.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) over 9 years ago

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