Why would a bank want to refinance my mortgage?
Written By: admin on July 20, 2009
One Comment
A few years ago, I had a mortgage with Bank A. The rates went way down so I refinanced with Bank B at a lower rate AND a shorter term (went from 30 year to 15 year.) Why would Bank B want to offer me something like that? What is in it for them? Please advise. Thank you!
Related Financial Planning Posts
Tags: mortgage, mortgage bankTags: mortgage
It’s all about the money. They are in the job of making money. I reckon I can clarify it like this. They will be able to make lots of money off this new loan.
Let’s just say that you borrowed $100,000.00 that would be 180 payments for 15 years. Now let’s say that your new mortgage rate is 5% and now your new payments are $790.79.
On a $100,000 loan for 15 years the total Interest would be $42,342.20 Not a terrible increase. You will have paid $142,342.20 for a $100,000.00 loan.
That’s why they do it, in order to make a profit. Plus you had to pay refinance fees, closing fees and those should be factored into the final cost.
I’ve given you a webpage so you can calculate your own mortgage payments, even your ancient ones. Have fun with it.