Your Mortgage: Confessions of a refi addict

Charity Ohlund from Fountain Mortgage knows a thing or two about refinancing

By Charity Ohlund, Director of Business Development

Hi. I’m Charity. And I’m addicted to refinancing my home.

Well, to be honest, it’s not really an addiction to the refinancing process. It’s more of an addiction to saving money by paying less interest (a lot less) on my mortgage. Refinancing is just the vehicle that delivers the rush of good feelings.

Today, I’m closing on the third loan I’ve had on my home in the last 4 years. I bought it with a 30-year fixed-rate mortgage loan in 2016. In late 2017, I refinanced that loan for a lower rate and reduced the term to 20 years. Today, I’ll sign paperwork for another refinance that lowered my rate (by a lot) and takes my term to 15 years.

I’m feeling pretty blissful. Today is a good day.

Here are a few reasons why you might want to consider experiencing this euphoria for yourself:

  • Even if you recently bought or refinanced your home, it’s not too soon to take another look.It’s never too early to think about refinancing after already closing on a mortgage. There is no minimum time to wait. A mortgage is a contract. As soon as you can get a better deal, you should terminate the contract and take that better deal. Say you want to keep your term the same and apply the money saved each month back to the loan in the form of accelerated payments toward the principal. If so, you will almost certainly pay off the new loan faster than the old loan. And you’re not adding enough time on the loan to really matter. In other words, you’re not resetting your loan term by much if you’re just eight or 12 months into your mortgage. But if you’re much further into your loan—say five to 10 years—resetting to a new 30-year mortgage may not pay off. It’s important to have a consultation with a mortgage loan officer to talk about your specific scenario. An experienced mortgage pro can present you with more options and opportunities beyond just the “lower rate no brainer.”
  • If you’re worried about closing costs, there are ways to avoid needing cash at the closing table. There are two main ways to avoid closing costs when you refinance. First, you can look for a “no-closing-cost refinance,” which typically means the lender covers your closing costs in exchange for a slightly higher interest rate. In today’s market, this rate will likely still be much lower than your current rate. (Rates really, truly are ridiculously good right now). Or, you may be able to roll closing costs into your new loan. Technically, you still pay closing costs with this method. But they’re financed along with the rest of your mortgage, so you don’t owe anything out of pocket on closing day.
  • Skipping up to two mortgage payments is the cherry on top. When you refinance your loan, you can work with your lender to time the closing just right to allow you to skip one or two mortgage payments. I’m not taking any cash out of my equity with today’s refinance, but I don’t have to make my August or September mortgage payments. So I’ll still get some extra cash by skipping those payments, and I’m using it to get rid of the carpet on my stairs and put down hardwood. This sounds not overly exciting, but trust me, that carpet is really ugly. And I cannot wait to walk in my door every day and not see it.
  • Refinancing sooner versus later can also be a good strategy if you:
    • Want to take extra cash out (tap your equity) to pay for something like a remodel, automobile, or debt consolidation.
    • Need to take a partner off your loan due to a recent separation.
    • Have an FHA or conventional loan, for which you pay private mortgage insurance (PMI), and want to eliminate your PMI payments.
    • Have seen a boost in your credit score recently; you may qualify for an even lower interest rate with a higher credit score.

If you also have an addiction to keeping more of your hard-earned money, the first step is admitting it. I’m here to talk with you if you need someone to listen. Do you want to lower your rate? Reduce your term? Both? Keep your term? Lower your rate? Reduce your payment? Get cash in hand for expenses? All we need to start the conversation is a download of your most recent mortgage statement and a few minutes on the phone or in a text chat. You can reach me at 816-518-7812 or anyone at Fountain Mortgage in Prairie Village at 913-745-7000.

This weekly Sponsored Column is written by Charity Ohlund of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.

Fountain Mortgage NMLS: 1138268