We refinanced our mortgage!

We kept getting phone calls from our current mortgage company. They wanted to let us know that rates were lower and they thought they could get us a really great deal on a refinance. We kept ignoring these calls because it felt weird and predatory, and they always called when we were busy with something else.

Turns out, it was actually a good idea. Interest rates had in fact dropped quite a bit since we bought our house, so once they ran the numbers to show us our savings, we went forward with it.

I’ll admit, we didn’t shop around for the absolute lowest rates. But the good news is, with the lower interest rate, we’ll end up paying off our mortgage 4 years earlier than if we had stayed with our first mortgage, even if we don’t increase our monthly payments. Which feels pretty nice.

But there’s a relatively simple way to accelerate our payoff even more, without actively scheduling extra payments. We can switch from monthly mortgage payments to paying half of a mortgage payment every two weeks. This results in about 13 months of payments per year.

I ran the numbers in Bankrate’s Biweekly mortgage payment calculator, and it shows that if we switch to biweekly (as in fortnightly) payments, we’ll pay off our new loan an additional 2 years earlier and save an additional $18k in interest.

Of course, this option isn’t for everyone. You’ll need to consider if you can afford those extra payments, and check to see if your lender even allows you to do this. There’s a good post explaining why you may or may not want to do this. We decided that this path made sense for us because it’s not super aggressive to the point we’re missing out on investing options or having to forgo other things we want to do. It’s a happy medium between maintaining slow and steady payments and driving ahead with really aggressive payments. Plus, we can just automate it and forget about it!

Have you refinanced a mortgage? What were your requirements for moving forward with it? What is your mortgage payoff strategy?