Just a reminder that refinancing and changing banks has different implications in different parts of the world and you should always speak to a qualified professional for advice.
Unless they also do NOT restart your mortgage clock and make all the prior years you've paid irrelevant, the only people making out are the banks. Imagine going from a $2400/mo payment 10 years deep on a 30yr note, then restarting that clock back to 30 years at $2000/mo. Do you save any money? Per month, yes. Overall? Absolutely not. On the original note, you have $576K in P&I over 20 years remaining. On the restarted note you have $720K total P&I on the 30 years remaining.
You don't just want a lower payment; you want NO payment, and should get there as fast as possible. The faster you get there the less money the bank makes on you. Anyone restarting a 30 year note not under hardship is just feeding the bank more money and remaining a slave to them, no matter who they are ,and whether you switched.
The IDEAL refinance is one where you (a) get a lower rate of at least 1.5%, preferably 2%+), (b) does NOT require you "reclose" and pay new closing and title insurance, (c) you do NOT pull out any money from your equity on the refinance, and finally (d) the refinance term is no more than your current term of years remaining, and preferably less (e.g. you trim years off on the new note). If you can do all of those things and still get a significantly lower monthly, do it. Otherwise, pass
Almost all home loan in the US front load the interest (same with car loans), this is why for the first few years of your mortgage you won't see your principle go down much.
Banks want you to switch because it keeps you in the interest heavy portion of the loan longer, which means it takes you longer to pay off as a large portion of what you are paying is just interest. Look closely at your amortization table that you were given when you got the loan, you will see the principle payment go up and the interest payment go down the later in the term you go.
This is also why paying extra PRINCIPLE payments early on is so beneficial.
It isn’t just mortgages, you can also save money if you switch your insurance, car loans, even phone carriers. Be smart people loyalty to a company can cost you 10s of thousands of dollars maybe even 100s
Could also just pay more to the principal over the the years to get the loan itself paid off earlier, making that need to swap, moot. Chances are you're extending the length of the loan for less, while still having to pay even more in interest over that time…cause while you may have been 15 years into a 30 year mortgage, the principal vs interest would be roughly equalized on your monthly, you're just shooting that back up to like 90/10 or however your new loan is set up. The banks will always get their money out of you – smartest option is pay off EARLY and end it.
depends on when you had your loan setup and what the interest payments are. Better read that fine print too because good chance you're going from a fixed rate to an ARM, and they will take your arm.
In the US if you refinance your loan, your payment may drop but you're resetting the term. So if you're 2 years into a 30yr loan and you refinance of course your payment should go down but you just added 2 years back to the end of the loan. You can't just get a 28 year loan. Math is a very important skill.
I just switched my personal banking. I was on a zero hoops high interest savings account, but they limited the high interest to just one account, introduced income thresholds, and required growing the high interest account to receive the interest. Even though the new bank has slightly lower savings interest, it applies to x3 the money, without the liability of hoops. Lesson learnt: always be ready to jump.
Start reading the paperwork and watch how uncomfortable the guy asking you to switch gets. Its a great tell as to if you need a l;lawyer to look at the paperwork.
I switched at the end of my first 5 year fixed rate period, when mortgage rates had gone mental and risen sharply a couple of years ago. If I'd stayed and done nothing, my rate would have gone up to around 8%, and I had been on something like 2.1%.
I went to a mortgage broker and they got me a new mortgage deal at under 4%. With the overpayments I'd also been making in the first 5 years, my monthly payment actually went down even with the higher interest rate.
Definitely worth talking to a mortgage broker if you're coming to the end of a fixed interest period (UK based btw).
I asked my bank for a new rate when they dropped much. First they didn't propose any decent deal. Then I wrote a paper about loyalty and the stupid outcome of this and they proposed something decent. We pay the same amount but 5years less.
Except vibe coding isn’t more high level- cuz the output is the same level of abstraction as hand writing it. The problem with vibe coding is that vibe coders will lack the skill to understand and debug their own code
So this is more about the current market interest rate than the bank. I'm sitting on a 4%rate right now, so a refi would bring it to about 7% and would not be a smart move.
Also, be careful with the 'monthly' cost analysis, look at the total cost instead. If you refi with only 20 years left on your loan and bring it back up to 30 years, sure you might pay less per month but you just added 10 years to your payments.
Just a reminder that refinancing and changing banks has different implications in different parts of the world and you should always speak to a qualified professional for advice.
Unless they also do NOT restart your mortgage clock and make all the prior years you've paid irrelevant, the only people making out are the banks. Imagine going from a $2400/mo payment 10 years deep on a 30yr note, then restarting that clock back to 30 years at $2000/mo. Do you save any money? Per month, yes. Overall? Absolutely not. On the original note, you have $576K in P&I over 20 years remaining. On the restarted note you have $720K total P&I on the 30 years remaining.
You don't just want a lower payment; you want NO payment, and should get there as fast as possible. The faster you get there the less money the bank makes on you. Anyone restarting a 30 year note not under hardship is just feeding the bank more money and remaining a slave to them, no matter who they are ,and whether you switched.
The IDEAL refinance is one where you (a) get a lower rate of at least 1.5%, preferably 2%+), (b) does NOT require you "reclose" and pay new closing and title insurance, (c) you do NOT pull out any money from your equity on the refinance, and finally (d) the refinance term is no more than your current term of years remaining, and preferably less (e.g. you trim years off on the new note). If you can do all of those things and still get a significantly lower monthly, do it. Otherwise, pass
“I pay less”
half hearted yeah
So it’s a longer mortgage.
This is very misleading, at least in the U.S.
Almost all home loan in the US front load the interest (same with car loans), this is why for the first few years of your mortgage you won't see your principle go down much.
Banks want you to switch because it keeps you in the interest heavy portion of the loan longer, which means it takes you longer to pay off as a large portion of what you are paying is just interest. Look closely at your amortization table that you were given when you got the loan, you will see the principle payment go up and the interest payment go down the later in the term you go.
This is also why paying extra PRINCIPLE payments early on is so beneficial.
This is a gross misunderstanding of how mortgages work. Amortization schedule anyone?
It isn’t just mortgages, you can also save money if you switch your insurance, car loans, even phone carriers. Be smart people loyalty to a company can cost you 10s of thousands of dollars maybe even 100s
Staying with the same company isn't loyalty, its apathy.
I've switched my mortgage 422 times so far.
Every month the bank pays me 40$
Is it the same in Ireland?
Your videos should be part of the High School curriculum
Guy kinda resembles George Cloony. Anyone else see this?
Could also just pay more to the principal over the the years to get the loan itself paid off earlier, making that need to swap, moot. Chances are you're extending the length of the loan for less, while still having to pay even more in interest over that time…cause while you may have been 15 years into a 30 year mortgage, the principal vs interest would be roughly equalized on your monthly, you're just shooting that back up to like 90/10 or however your new loan is set up. The banks will always get their money out of you – smartest option is pay off EARLY and end it.
Would this still be the case if you were debt free ie no mortgage or credit card?
depends on when you had your loan setup and what the interest payments are. Better read that fine print too because good chance you're going from a fixed rate to an ARM, and they will take your arm.
Same with mobile phone contracts, internet providers, electricity providers, gas suppliers, insurances – at least in Europe it's like that.
It would make no sense to get a new mortgage when the rates are double of what u have
In the US if you refinance your loan, your payment may drop but you're resetting the term. So if you're 2 years into a 30yr loan and you refinance of course your payment should go down but you just added 2 years back to the end of the loan. You can't just get a 28 year loan. Math is a very important skill.
I'm not sure about this one – yeah the monthly rate will be lower but it's mostly since you're extending the loan payback duration, no?
Free?
Is this with or without a refinancing or is this simple to switch are there any fees
Had a mortgage for 11 years and changed lender 4 times to get better rates.
Businesses like banks and insurance companies have found that there are “magic numbers” where people will actually switch providers.
If they stay below their number, folks will stay with them.
I just switched my personal banking. I was on a zero hoops high interest savings account, but they limited the high interest to just one account, introduced income thresholds, and required growing the high interest account to receive the interest. Even though the new bank has slightly lower savings interest, it applies to x3 the money, without the liability of hoops. Lesson learnt: always be ready to jump.
Start reading the paperwork and watch how uncomfortable the guy asking you to switch gets. Its a great tell as to if you need a l;lawyer to look at the paperwork.
I switched at the end of my first 5 year fixed rate period, when mortgage rates had gone mental and risen sharply a couple of years ago. If I'd stayed and done nothing, my rate would have gone up to around 8%, and I had been on something like 2.1%.
I went to a mortgage broker and they got me a new mortgage deal at under 4%. With the overpayments I'd also been making in the first 5 years, my monthly payment actually went down even with the higher interest rate.
Definitely worth talking to a mortgage broker if you're coming to the end of a fixed interest period (UK based btw).
I dont think im gonna remember this when im in any position to buy a house. With how things are going, thats easily 10+ years away for me
Ya unfortunately you restart the internet as well.
To note: you may save a good amount monthly, but the term of the loan resets.
Great info. Will remember this when I'm 45 and buy my first house
I asked my bank for a new rate when they dropped much. First they didn't propose any decent deal. Then I wrote a paper about loyalty and the stupid outcome of this and they proposed something decent. We pay the same amount but 5years less.
Same with employers. Exact same deal. Most people won’t switch.
Switching banks!!
And if you just pay it off you save one million dollars 😅
We churn about every 3 years. The hell with loyalty
No context lol, whats the rate and closing cost?
Except vibe coding isn’t more high level- cuz the output is the same level of abstraction as hand writing it. The problem with vibe coding is that vibe coders will lack the skill to understand and debug their own code
You are a debt slave mate , in a slave market
If any mortgage broker ever explains refinancing to you like this, you are in the wrong place.
So this is more about the current market interest rate than the bank. I'm sitting on a 4%rate right now, so a refi would bring it to about 7% and would not be a smart move.
Also, be careful with the 'monthly' cost analysis, look at the total cost instead. If you refi with only 20 years left on your loan and bring it back up to 30 years, sure you might pay less per month but you just added 10 years to your payments.
Only know you love her, when you let her go
Bank pays the broker = bullshit!