The Fast Track to Gaining Equity with Refinancing
By Craig Romero

When most people think of refinancing, they think of a way to lower their monthly payments or to get cash out of their homes, but there’s another aspect to refinancing that more and more people are finding out about and utilizing.

Your home is probably your biggest asset, and the equity in your home is the key to that asset. If you’re paying off at typical 30-year mortgage, you could be throwing some of that equity, and thousands of dollars, away. More and more people are finding out that by refinancing their homes, they can build equity faster and pay of their loans earlier. With mortgage rates being some of the lowest in history, now is the perfect time to review your refinancing options and look closely at what refinancing can do for the equity in your home.

If you can refinance your home at a lower interest rate, but make the same monthly payment that you’ve been making, you can save thousands of dollars in interest, pay your home off early, and build equity faster than if you had continued to pay at the higher rate of interest. Some borrowers who qualify may even want to refinance at a lower interest rate, but take out a 15-year mortgage instead of a 30-year mortgage. A 15-year mortgage can save you thousands of dollars. For example, let’s take a $100,000 mortgage with a 7 percent interest rate. If you were to take out a 30-year mortgage with those terms, your total payments would equal $239,511 and the total interest you paid would equal $139,511. If you took that same exact mortgage amount and interest rate, and took out a 15-year mortgage, your total payments made would equal $161,789 and the total interest you paid would come to $61,789, saving you approximately $77,722. Obviously, if the loan amount were higher, and the interest rate were to decrease when you refinance, you will save substantially more.

Even if you don’t qualify for a 15-year refinance, you will want to ask the lender to prorate the length of your loan to the amount of time you currently have left to pay off. For instance, if you’ve been paying on your mortgage for 10 years, ask for a 20-year mortgage instead of a 30-year plan. This will ensure that your home is paid off in the quickest amount of time possible and that your equity accrues at an accelerated rate.


Craig Romero is a mortgage analyst dedicated to helping you maximize the investment in your home.  Visit his site to learn how to quickly build a minimum of $40,000 worth of home equity and pay your mortgage off in 10 years or less without making biweekly mortgage payments. www.wisemortgageinfo.com