Are you looking to reduce your mortgage? You might be in luck.
Many homeowners turn to refinancing to change their monthly mortgage payment. However, fewer homeowners decide to pursue re-amortization because it isn’t a well-known option even though it’s one of the top ways to reduce your mortgage.
This process is a less expensive way to refinance your home loan payments. It helps you save money on your monthly payment without the hassle of an expensive refinance. So, how does it work?
Here’s what you need to know to decide whether it’s for you.
What Is Re-amortization?
Re-amortizing occurs when someone decides to pay an additional amount of money to their monthly mortgage payment.
This money reduces the principal balance of the loan. Basically, you can pay a lump sum and ask your lender to reduce your monthly mortgage payment.
This option is typically only available for fixed-rate loans. It doesn’t affect the interest rate. However, it reduces your monthly payment and the amount of interest paid on the loan.
It has no bearing on the loan term. If you are locked into a 30-year mortgage, you’ll still be locked into your 30-year payment after re-amortizing.
Why Try It?
There are several advantages to re-amortizing your mortgage.
For one, it’s less stringent than re-financing. You don’t have to get a credit check or pay exorbitant fees. Lenders usually charge only a few hundred dollars for this service.
It’s also a popular option for people who have recently locked into a long-term mortgage. For newer homeowners, re-amortization is a much easier way to reduce your monthly mortgage payment than refinancing.
You might also want to re-amortize if you’ve recently come across a windfall of money. The median monthly mortgage payment is over $1,000 and continues to rise. Re-amortizing is a convenient way to reduce your monthly burden and set yourself up for the future.
Let’s say you receive a huge bonus from work or a family inheritance. You can re-amortize your mortgage to make sure that you meet your monthly payment when your financial situation is less secure. This process will also reduce your loan interest since you’ll be ahead of your payment schedule.
Who Can Apply?
Re-amortizing isn’t available to everyone. How do you know if you qualify?
First off, it only makes sense to apply if you have a large sum of money available that you’re ready to invest.
You must also have a lender that offers this as a service. Big banks, like JPMorgan Chase, offer this service to their customers. However, they can choose to exclude certain loans from eligibility.
For example, big banks usually deny this service to borrowers using loans backed by the Federal Housing Administration. The Department of Veterans Affairs loans are usually ineligible as well.
The key is finding a lender who is willing to re-amortize your loans. Lenders aren’t obligated to offer this service. Always stay up to date on property buying secrets before purchasing a mortgage.
Are you interested in buying or financing a mortgage? We can help. Get a quote for our new home loan or refinancing options today.
7th Level Mortgage is a leading one-stop mortgage company providing deeply informed, custom-tailored assistance with every phase of each mortgage transaction. If you are searching for a home loan in New Jersey, Pennsylvania, Delaware, Maryland, New York, or Florida, please contact us today so that we can determine the best Mortgage Lender to place your loan with and get you the best possible rate and program.