I’m not sure why we waited so long, but Kirk and I finally refinanced our mortgage to secure a lower interest rate. We have been trying to figure out how to pay off our mortgage sooner, but we didn’t want to lower our retirement contributions to get there.
Refinancing our mortgage allowed us to reduce our interest rate by 1.375%. We went with a 30-year fixed rate loan again, however, we’ll be paying the same amount we were paying before refinancing – even though our new mortgage payment is lower.
Since we’re paying the same as we were before even though we now owe less each month, we’ll actually be paying an additional $220 towards the principle of our loan each month. This will shave nine years off the term of our loan – even if we never raise our overpayment.
So, by not paying anymore than we have been each month, we’ll get through our loan nine years earlier. Like I said earlier, I’m not sure what took us so long to refinance with low rates like these!
Even though I thought we shaved every possible unneeded expense from our budget, I overlooked the enormous savings to be had by refinancing our mortgage to lock in a lower rate.
Sometimes it’s the most obvious things that need reevaluated in our budget. Maybe it took clearing out all of the smaller clutter from our budget before we could see the single biggest opportunity for savings.
How about you? Is there a major beast sneaking under the radar in your budget too?