Quote:
Originally Posted by Challenger
why would you pay the bank $175 to "restructure" the mo pmt. when you can add additional principal pmts without charge?
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Example. You have a 350K mortgage at 4% and you have a PI payment of $1750. You go the bank and pay a lump sum of 150000 on the mortgage leaving you with a 200K balance. You can continue to pay the $1750 or if you give them a $175 fee they will recalc the loan and your new monthly payment is say $950. Now you do the math for a 15 year amortization on the 200K and that is now a payment of $1250. (they wont restructure the term for that fee just the PI payment) So by paying a lump sum, you have dropped your PI by $500 and restructured the loan to a 15 year. If you continued to pay the $1750 it would have brought it down to 12 years, but by doing the restructure you have increased your flexibility tremendously. Cheap cost for major flexibility. I made up all these number so they are probably not right but the process and advantage are close.
Gave me $575 monthly cash flow increase and potential for $900 improved cash flow if needed. Allows me to buy another rental property. I could have just used the cash for the rental, but that would have impacted taxes negatively. This way is a win win strategy.