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Refinance But Leave Your Payment the Same
05/15/24
Refinancing a higher-rate mortgage into a lower-rate mortgage generally results in lower monthly payments – after all, the lower the interest rate, the lower the payment. Many homeowners refinance to take advantage of lower rates, freeing up cash for other purposes. But if you can afford to, consider refinancing but sending in the same amount for your monthly payment. You’ll build equity faster and pay off your mortgage more quickly.
For example, say refinancing results in a monthly payment dropping from $1,200 per month to $1,100 per month. Make a payment of $1,200 and specify that the additional $100 should be used to pay off your principal balance. Each year you’ll reduce your balance by $1,200 – that way you’ll build equity more quickly and shorten the overall term of your loan. Say your original loan is for $200,000 at 6%; sending an additional $100 per month will allow you to pay off your loan in less than 25 years.
Ready to explore how Sunflower Bank can assist you? Speak to a personal banker at a branch near you, contact a specialist on our Private Wealth team, or find the right financial partner on our Commercial Banking team for your business needs.
This article contains general information only. Sunflower Bank, N.A. is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. It is not meant as a substitute for such professional advice or services. Before making any decisions related to these matters, you should consult a qualified professional advisor. Investment and insurance products are not FDIC-insured, are not a deposit or other obligation of, or guaranteed by the bank or an affiliate of the bank, are not insured by any federal government agency and are subject to investment risks, including possible loss of the principal amount invested.