Lower My Monthly Payment

What is the Benefit?

A rate and term refinance can lower the payment in the following ways by: Extending the Term and with an Interest Only Payment.

Whether a conventional or jumbo loan scenario, we are always happy to do the mathematical calculations for you to see if a rate reduction makes sense in your case.

We’ve broken down the details of both benefits below:

Extending the Term

By extending the term to a new 30-year loan, homeowners can lower their payment and increase their monthly cash flows.

Many homeowners express reservations about starting with a new 30-year loan. In a normal market, homeowners are inclined to pay down the mortgage principal as quickly as possible in an effort to increase their home equity.

However, in an upswing market where home values are substantially up (i.e., current 2020-2022), the reservation about starting with a new 30-year loan is not as applicable because the goal of increased home equity is met thanks to market appreciation.

In other words, in an upswing market, homeowners have the luxury of starting with a new 30-year loan with a lower payment and increased cash flows, relying on market conditions instead to achieve the goal of increased home equity.

Interest Only Payments

Interest only payments are available for Jumbo loans (over $647,200 or $970,800 depending on the county).

Consider this example: a loan amount of $1,000,000 with an interest rate of 4% on a 30-year fixed loan, the monthly payment of $4,774/month (Pincipal & Interest).

For the same property with an Interest Only payment, the monthly payment would be reduced to $3,333/month!

An interest only payment for a $1,500,000 loan would be at $5,000/month and an interest only payment for a $2,000,000 loan would be at $6,670/month!

As you can imagine, an interest only option is very popular with homeowners who have high mortgage balances because it allows them to keep their payments much lower when compared to a traditional 30-year mortgage.