Being honest paidoff - and put $15,000 in my client's pocket!

Being honest paid off - and put $15,000 in my client's pocket!

I admit it, I am kind of a geek when it comes to comparing loan scenarios for clients. Yesterday I made a call to a client who had asked me to watch rates for them. They are on a 15 year loan with 8 1/2 years left and a rate of 5.375%. By this point in a 15 year amortization, more than half of their payment is going toward principal. Why refinance it, right?

They asked me to run several scenarios for a new 10 year loan. The loan would shave $300 off their payment so they wanted to know how it would look if they paid an additional $300 on the new loan I was proposing. And what about $500? And how much would they need to pay to pay it off in 7 years? This is the kind of thing that really gets me excited (now you see my inner geek, don't you?). If it weren't for this awesome website I found, it might not be as much fun. I ran my numbers and anxiously awaited their arrival in my office.

Sometimes I am honest to a fault and it costs me a loan. But I believe it is better to do what is best for my client's needs then my own. So I threw down the interest card. Since so much of their payment is going towards principal already, would it really be a big enough interest savings to make it worthwhile? This is where I thought I was going to cost myself the deal...so I ran the numbers and fireworks went off. By refinancing their loan to a lower rate they can continue making the same payment they have been making (which included a few hundred dollars extra to principal) and they will SAVE $15,000 in interest over the next 7 years!

Want to guess whose application is being delivered today?