Question by aToTheZ: Is it possible to take out a 40 year mortgage and then refinance to a 30 year 3 years later?
I know that a lot of people say that a 40-yr mortgage is not a good deal because you end up paying a lot of interest and the monthly payments are only slightly lower. But if that option was chosen anyway, would it be possible to refinance to a 30 year loan within the first five years so more equity can be paid in the house faster. In other words, is it necessary to keep the loan period to the 40 years even after refinancing? I would appreciate any help. Thanks
Answer by KC
Yes you can. However if you are otherwise happy with the current terms of the loan, you can make extra payments against the principal of the loan. You can do this without having to refinance. Be sure to send these extra payments as a separate check with ‘principal’ printed in the memo field. Otherwise they will just apply it to your escrow account.
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