Mortgage Refi Question

clg7067August 11, 2011

So, a lot of people refinance their mortgage when the rates go down enough.

I called my bank and asked if they would just rewrite the note. Because, first of all, I'll be paying less per month, and also, the termination date will be the same. So, I'm not taking out a new 30 year loan. Just want lower rates on my remaining 20 years.

Does anybody know why banks don't do this, other than income from the extra fees?

BTW, they keep sending me letters telling me that "Now is a good time to refinance at a lower rate." Yep, it's all about the money.

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Gee.. banks are all about the money!
Imagine that!

    Bookmark   August 11, 2011 at 4:47PM
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If I were doing over, we switched from a 30 to 15 year, I would refinance for a 30 year for the lower rate and continue paying as for the original note. Either for a 20 or 30 year you will be paying all kinds of fees. Although the rate is lower than your current the re-fi interest rate is generally higher than the new purchase rate. If you would need to pay the lower amount you could but by paying off using the original payment amount you will be paying off sooner and saving interest. However you must be certain that wherever you are getting your re-fi does not charge any prepayment fee.

    Bookmark   August 11, 2011 at 6:29PM
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I decided not to refinance because I plan to pay it off in 6 years anyway. I really hate my bank. Can you tell? ;) They tricked me into an ARM saying I didn't qualify for a 30 year fixed, luckily for me my rates keep going down. So, I guess it worked out for me.

    Bookmark   August 12, 2011 at 10:22AM
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"Does anybody know why banks don't do this, other than income from the extra fees? "

Some lenders actually do what you are suggesting. They never used to, but many people have been getting unsolicited offers for zero cost refinancing with their current lenders.

And of course, that is about the money too. Since lots of people refinance before paying off the loan, some lenders have found it makes more sense to lower the rate than to lose the business completely. Of course, most lenders sell off the loans they make, so they don't care if you pay off early etc. They make all their money off of the up-front fees, not the 30 years of interest.

    Bookmark   August 12, 2011 at 10:47AM
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clg, we paid ours off early and never regretted it. You will save so much in interest!

    Bookmark   August 14, 2011 at 3:36PM
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