I have 7 years left on my mortgage, and want to refi. With the reduction in interest rates, I have calculated that I can get a 5 year for the same monthly cost as my current rate. I have already done the calculations and have factored in closing costs. But, do banks give 5 year fixed mortgages?
Generally, banks do not make 5-year consumer mortgage loans. A term that short is usually reserved for commercial loans only.
But you should be able to find a 10-year mortgage, or at least a 15-year loan. Since most loans do not carry a pre-payment penalty, you could just make payments high enough to pay it off in 5 years – just use a financial calculator to figure out the payments.
Something to keep in mind is that with only 7 years left on your mortgage, most of your payments are already now going toward reduction of principal, and not that much is going toward interest. So even if you were to reduce the interest rate, you’re probably not going to save that much money. Hope that helps.
I’ve never heard of 5 year mortgage. Have you calculated 15-year mortgage with prepayment? May be that’s an option.
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Generally, banks do not make 5-year consumer mortgage loans. A term that short is usually reserved for commercial loans only.
But you should be able to find a 10-year mortgage, or at least a 15-year loan. Since most loans do not carry a pre-payment penalty, you could just make payments high enough to pay it off in 5 years – just use a financial calculator to figure out the payments.
Something to keep in mind is that with only 7 years left on your mortgage, most of your payments are already now going toward reduction of principal, and not that much is going toward interest. So even if you were to reduce the interest rate, you’re probably not going to save that much money. Hope that helps.
References :
I’m a banker.
The answer is rarely, and I will tell you why. I to would like to refi, but you see, they are in the banking business to first make money and second to loan money. That means to me, and you, that unless they can sell you a loan wherein they make at least a couple thousand in "cost" and fees, they aren’t interested in us.
So here is a thought I am looking at: a home equity loan at a cheap enough I rate to make sense. I do no know if it will work yet, I have to figure in the interest saved versus the points paid, the cost of yet another appraisal, and the fees.
It is I really believe at this stage in your mortgage, to pay any of that "waisted" cost of fees into your loan. And try to pay it down faster with extra principle payments. And that is most likely what I have to do too.
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