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.
This is a great idea—I just emailed my lender to ask about recasting for my mortgage, since it’s at 5.375% 🙁
Brilliant!
As the Tesco’s adverts say “every little helps” and you will save more than a little.
I was just about to start the process of looking into doing a refinance, I may want to just check with my lender first as you have to see if there are any options like this available. I’m with Bank of America though, so I’m not going to get my hopes up! Congrats on the new lower rate!
Bravo! So many people out there could save so much money if they just put in the leg work. It cost nothing to ask. Nice job.
This is brilliant! Congrats on the lower rate by the way. The majority of the people are scared to even ask for a lower interest rate I think because they wouldn’t actually think they would lower it. Your case is a perfect example to let others know, hey! All you have to do is ask. The worst thing that could happen is them saying no. Give it a try! 🙂
Thank you so much for this information. In the past few years I looked into refinancing but didn’t do it because of the closing fees and going through the whole appraisal process seemed like a pain because we didn’t have a horrible rate. However, I used to work at the bank that holds our mortgage, so I emailed one of the higher ups in residential lending back in July asking about re-casting (I’d never heard of it previous to reading it here).
He came back with some initial solutions that weren’t great. So I told him thanks but no thanks, and we were going to re-finance with one of their competitors because they had better rates. With that information, he came back with a much better solution. We’re going to be re-casting it to a 15 year fixed at 3.75% (Going from 30 year fixed, and we’re in year 8 at the moment). Our payment will be about $100/month more, but it’ll save about $67000 in interest in the 15 years versus keeping our current 30 year fixed. The re-cast fee is $895, so it’s a lot cheaper than $3000 in closing costs and no re-finance is needed. Maybe I should have done it sooner, but $67000 saved is still significant. And paying the principal down much quicker is priceless!