Happy to report a good change with Operation Refinance. My friend was able to spend some time calling and emailing lenders to find a deal that works. Getting some great responses from current and possible lenders, we decided to see which were the best offers.
One of the offers was a no cost refinance – well, it’s not really no cost. The catch was a slightly higher interest rate (.25-.35%) and the closing costs would be paid by the mortgage lender.
Another offer was a lower interest rate and paying half of the closing costs. As they are on a tight budget, they are leaning towards going ahead and taking the no out of pocket option.
Refinancing Offers Short Term and Long Term Benefits
Looking at the numbers, my friend comes out ahead with the refinancing. Not only can they lower their monthly payments, but they can also knock off time from their mortgage loan as they would be going with a 20 year fixed rate mortgage. They didn’t want to restart with a 30 year mortgage.
Getting a refinance that they can also save money over the life of the loan with interest payments. That’s because most of the money goes towards paying interest in the beginning of a mortgage. As the loan draws to a close, the payments increasingly goes towards the principle owed.
That means that the money saved can be used for other financial goals, including bumping up retirement contributions, paying off debt, or saving for the next car.
Thoughts on Refinancing
It looks like my friend will get back with me when they decide which offer to take. I wish them the best with the refinance.
I’d love to hear from those who have gotten a refinance recently. Were you offered a no cost refinance option? did you take it – why or why not? How was the process for you?
Photo Credit: sushi♥ina