One of the concerns we have when our clients are refinancing their home mortgage is that they may be extending the term of their mortgage.
For example, if you did a 30 year mortgage four years ago, you now have only 26 years left on your mortgage. ﾠIf you are considering a new 30 year mortgage, you are now adding another four years to the term of your loan.
Our ultimate goal is to get you in a position where you no longer need a mortgage. ﾠIn many cases, the fastest route to get people there is to increase the term of their loan to put them in a better position in other areas of their financial picture. ﾠHowever, if you are in a position to maintain or shorten the term of your loan, there are several options:ﾠ
1. Choose a shorter term mortgage
2. We can customize a term with our “Your Term Mortgage” Loan. ﾠFor example, if you have 26.5 years remaining, we can set the loan for a 26 or 27 year amortization schedule. ﾠThere may be an increase in fee or interest rate for this, but it will keep you on or near the current term of your loan.
3. We can tell you the monthly payment to make on your new 30 year mortgage to keep you on the exact same amortization schedule. ﾠThis will require discipline on your side to make a higher than minimum payment due each month. ﾠHowever, it can put you on the precise amortization schedule as you are now on.
4. If you situation allows, we can set your new mortgage balance for the same amount you borrowed when you took out your current loan and use the extra to make a principal curtailment payment. ﾠThe principal balance reduction will force down the amortization schedule to match your current amortization schedule.
Our goal is to help you think of any potential downside to refinancing your home. We are available to discuss any thoughts or concerns you may have. As your advocates, we are here to help you make wise financial decisions.