We took advantage of the low-interest rates and refinanced. Here’s what happened.

Written by: PHG Bonnie Wisnowski

Where to start

I will fully admit, although I have learned to be a good saver, I am not great with all things financial. I sort of just hope they will work out for themselves. I get sweaty palms thinking about how to deal with matters that as an “adult”, I should know how to deal with. 

One of those is refinancing your home. Working at Philly Home Girls allows me to eavesdrop on convos between lenders and our agents. For a while now I’ve been hearing about the amazing interest rates and it being “a great time to refinance your mortgage”.  I knew it made sense to refinance my home that my husband and I purchased in May of 2017, but didn’t know how to start that process. 

Imagine my relief when our Mortgage Lender, Greg Roth, from Approved Mortgage Group,  reached out to us suggesting we take a look at refinancing our 30-year mortgage. He sent over paperwork that outlined keeping the mortgage as a 30 year. With the stellar interest rates it would provide some savings, but not enough to justify refinancing. Yet, if we wanted to move to a 15-year mortgage, our monthly payment would go up slightly but we’d see major savings in the end and could pay our loan off quicker. 

When we initially bought our home, I wasn’t working, and having the least expensive monthly mortgage payment was the priority. Now, however, we could afford to creep that payment up. With Greg’s advice, we decided to move forward with his recommendation of adjusting our 4.75% interest rate on a 30-year mortgage, to a 2.75% interest rate on a 15-year mortgage. Because our home increased in value over the last 3 years we have owned it, the Private Mortgage Insurance (PMI) was able to be removed. This means all of our payments going forward will go toward principal and interest and not the PMI. Celebration all around!

Three things we learned

1. One roadblock I overcame was having to pay closing costs when refinancing. It is much less than when you purchase a home, but still could be in the thousands. I learned you can increase your loan amount to include those closing costs so you do not have to bring a check to closing. That means we were able to keep our nest egg savings for home repairs, renovations, or who knows an investment property perhaps? If you plan to sell in a few years adding closing costs to your principal home is something you might consider a deal killer so plan long term.

2. If we want to include a little extra in our monthly payment here and there we can do so. Our particular loan doesn’t penalize for additional payments. For example, if we pay $200 a month on top of our normal mortgage payment for a year we can pay the loan off in about 13 years vs 15. Keep that pattern up and we could shave off years. Suddenly owning the home outright can happen a whole lot sooner than planned!  

3. We cut our loan time in half and only increased our monthly payment by about $300. This is still cheaper than what we were paying for rent 3 years ago before we purchased our home. We are also locked into that rock bottom, historically low-interest rate for the life of the loan, which is something we are pretty excited about. 

We are so happy to be taking a positive step in our financial future. Fortunately we have a loan officer that we trust. He is a recommended partner at PHG, and we have more that are just as incredible. If you need any help or advice on how to get the ball rolling for a refi, give us a ring and we will connect you with the right person who will make you feel responsible and all grown up. If I can do it, you can too!