• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Sonoma County Mortgages

Contact Us About Mortgage Financing

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now

Search Sonoma County Mortgages

  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • About SCM
  • About Scott Sheldon

Primary Sidebar

Sonoma County Mortgages is a part of New American Funding

New American Funding - NMLS #6606

Get Your Latest Rate Quote Now!

Home Mortgage Loans That Won't Turn Back The Clock

November 30, 2013 by Scott Sheldon

Share on Facebook Share on Twitter Share on Pinterest Share on LinkedIn Share on Email

Refinancing can be less appealing for many homeowners because the clock resets each time. In some circumstances, especially if you’re a few years away from paying off the home in full a refinancing may even not make sense. Ways to refi without starting the term over…

The traditional 30 year fixed rate mortgage remains most favorable, so we’ll start there. Whether the purposes are strictly payment reduction, interest rate reduction or pulling cash out, the long-term does start over a new 360 months. With 30 year rates under 4.5%, opportunities to reduce payment by virtue of interest rate reduction are still abundant.

When starting over a new mortgage, and the payment is reduced, the key is to make the same payment on the new mortgage you are presently making on the current loan you are paying off. Doing so will allows you to benefit by reducing the interest, keeping the payoff time frame the same as the old loan, and the flexibility paying a lower payment should financial your financial situation ever change.

Here’s Example Figures:

Original loan amount taken out in January 2009 for $300,000 on a 30 year fixed rate mortgage at 5.5% current balance $282,000- mortgage payment $1703.37

New loan term 30 years at 4.375% on same principle balance of $282,000-mortgage payment $1407.98

Payment savings on 30 year mortgage $296 per month

A smart mortgage shopper would stand to benefit by taking out the new 30 year mortgage one full percentage point lower in interest in exchange for the savings just shy of $300 per month.

By making the $1703 per month payment, rather than the payment of $1407.98 that’s actually due each month with the new loan, the loan would be paid off in 21.3 years vs current 26  years remaining with the higher rate loan.

Mortgage Loan Terms That Don’t Start The Term Over

30 Year -At loan application, it would be ideal to avoid pulling additional ‘cash out’ . *Mortgage Tip:  it’s going to require consistent diligence to be able to adhere to  making an overpayment each month beyond the payment due. It’s easy to fall off the wagon, so  perhaps a shorter-term fixed rate payment would be more suitable.

25 Year-  is the next best option  for homeowners to looking to continue to chip away at that principal balance. 5 years sooner on the pay off without making an extra principal payment.

20 Year- loan is paid off  240 months, which is one year sooner than taking the 30 year term  make an extra principal prepayment. Again, expect a higher monthly payment without the ability to revert  back to a lower payment should your financial situation ever change.

15 Year- provides the fastest payoff, in exchange for a payment that is nearly double the new 30 year mortgage for an additional 15 years of being mortgage free.

It  is important to be mindful of the fact, not all the rates on each of these programs are the same. In many cases the shorter the debt structure the better the interest rate as well. For example the 15 year mortgage is the ‘standard’  for the lowest rates. Why is this? 15 year mortgages are much more attractive to the secondary mortgage market as most mortgages are refinanced every 5 to 7 years, if not sooner. A 15 year mortgage means the consumer is paying all the interest faster in a shorter period of time making the loan more attractive to the end investor.

Mortgage Tip: Expect for every rate quoted on a 30 year, expect one full percentage point lower in interest on a 15 year.

Tips To Make Sure Your Refinance Is Not Really A “Re-Set”

  • Make sure you can handle making the old payment on new refinanced 30 year
  • Keep loan amount lower than your original principal balance (this would include increasing the loan amount unless you switch to a shorter term such as a 20 year term or a 15 year term)
  • Interest rate is the same or lower than current rate on loan being paid off
  • If mortgage insurance exists on the loan being paid off and the new loan contains a higher interest rate, the removal of the mortgage insurance alone greatly offsets even a slightly higher interest rate on the new refinance. Reason being  mortgage insurance (PMI)  is usually anywhere from $200-$400 per month)

If you are trying to reduce interest expense or want to see if the numbers make sense for refinance, start now by receiving a free mortgage rate quote.

Related Mortgage Advice from Scott Sheldon

  • When Does A 15 Year Loan Change From Paying Interest To Paying Principle?

    The answer in short - is never. At no time on a 15 year mortgage…

  • 15 Year Fixed Rate Mortgages Are HOT!

    Fixed-rate mortgages are quite competitive right now, many are seeking 15 year fixed-rate mortgages. You…

  • Refinance Without Starting Over At 30 years

    Yes you can actually refinance your mortgage loan without starting over the 30 year term.…

  • How To Refinance To A 15 Year Mortgage Even If Your Financials Don't Pencil

    One of the best way is bar none to eliminate your mortgage debt is moving…

Filed Under: Loan Programs, Mortgage Shopping, Mortgage Tips & Advice

Get Sonoma County Mortgages News and Updates in Your Inbox

Footer

SCM on Facebook

SonomaCountyMortgages.com

Connect on Facebook

SCM On Instagram

Follow Sonoma County Mortgages on Instagram

Follow on Instagram

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

See Reviews on Zillow

Location & Contact

Sonoma County Mortgages and New American Funding are an Equal Opportunity Housing Lender

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
2455 Bennett Valley Road C107
Santa Rosa, CA 95405
1-707-217-4000
View SCM Map | Email Us!

Map of Sonoma County Mortgages New American Financing Office

View Map on Google

Copyright 2010–2023 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing (Opens in New Window) | Privacy (Opens in New Window)
Terms of Use (Opens in New Window) | Electronic Consent Agreement (Opens in New Window)
Opens in new window Opens an external site Opens an external site in a new window