Resetting the Clock on Your Mortgage

Regardless of whether your home mortgage has a 15-year term, a 20-year term or a 30-year term, it has a fixed payoff date. As long as you make all scheduled payments on time, your mortgage will be paid in full by that date. You may not realize it, but you can reset your mortgage and adjust the final payoff date in the process. This is most commonly accomplished through a mortgage refinance. However, before you reset your mortgage, there are a few things you should know.

For example, when you adjust your payoff date, you may be pushing the date back. This could impact your ability to meet your financial goals going forward. In addition, your mortgage payment will likely change. This is because your mortgage payment is calculated by using the starting principal balance, the new payoff amount and the current interest rate. Many people take advantage of the opportunity to pull equity out of their house when they refinance their mortgage. Because of this, the principal amount on the new loan could be higher than the current loan balance. Regardless of whether the new loan payment is higher or lower than the current payment, you may be committed to that loan for several more years because you reset the term.

There are true benefits associated with resetting your mortgage. For example, it is possible to move the payoff date up and to lower your monthly payment at the same time in some cases. However, it is also possible to push the date back, increase your monthly payment and put yourself in a less desirable position with your mortgage. With this in mind, you should carefully research your options before you decide how to proceed. To explore the possibilities for your mortgage, contact the MortgageDepot team today.

Connect with one of our loan consultants to learn more.