First person: How refinancing 3 times saved us $175,000 in interest

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First person: How refinancing 3 times saved us $175,000 in interest

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Hernandez Family

Refinancing three times during the past 12 years lowered the length of our mortgage and reduced the rate by more than 5 percent, saving us over $175,000 in interest. Some might think refinancing three times is too much, but as a homeowner and a professional real estate broker, I can say that our household finances have greatly benefited.

Our original mortgage

We married in September 2000 in Las Cruces, New Mexico. A month before our wedding, we found our home. It was right before the real estate boom and we were able to close and move in within three weeks. We purchased it for $123,000 with a 30-year fixed mortgage at 8.25 percent.

Our house is in an older, established neighborhood and that is what we love about it. The backyard has tall, mature trees with tons of grass, uncommon in southern New Mexico. The previous owners had done quite a bit of updating but we felt it needed more so the first thing we did was remodel the kitchen.

Our first refinance

After two years we had the opportunity to refinance at 6.125 percent. We still opted for a 30-year fixed mortgage since we had been in our home less than two years. By taking advantage of the new rate, we were able to save $200 a month. This allowed us to explore more renovations. We opened a line of credit and put in new carpet and paint, remodeled our dining room and kitchen, and updated our bathrooms. Our home was molding into the home of our dreams.

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Our second refinance

In 2010 we decided to explore rates again. While we were unable to make a huge difference in our interest rate, we refinanced with a 20-year fixed mortgage at 5.375 percent. We rolled in the credit line with our mortgage. Our payments stayed the same but we were able to reduce our household bills by $250 a month. We put on a new roof, new exterior paint, backyard fencing, and a waterfall.

Our third refinance

We are now on our third refinance and we have locked a rate of 2.75 percent with a 15-year fixed mortgage. Our monthly payments will be reduced by $100 and we will shave three more years off our term. Our monthly savings did not drastically change but by taking advantage of lower rates and shorter terms, we will save over $175,000 in interest! Our house will be paid off well before we retire, giving us more cash to spend enjoying our lives. Who knows, maybe rates will go down even further and we'll refinance again with a 10-year mortgage? We recommend exploring your refinance options. Like us, you will be pleasantly surprised by the possibilities you find.

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