Despite a push to allow more Americans to refinance their mortgages (Harp 2.0), the Obamas haven’t taken the time to refinance their own, according to a disclosure released yesterday by the White House.
The financial disclosure revealed that as of the end of 2011, the 30-year mortgage (not sure if that means fixed or just refers to the term) tied to their south Chicago home, taken out in 2005, was still active.
Obama’s Mortgage Rate is 5.625%
Now we’ll assume he’s got a fixed-rate mortgage, even though that’s not entirely clear because no one is specifying.
And at 5.625%, that means he’s paying a rate nearly two percentage points above what mortgage rates are currently being offered at today for a 30-year fixed.
What we also don’t know is the loan amount. The disclosure only revealed that the loan amount is somewhere between $500,001 and $1 million.
Now assuming it’s not a jumbo loan, he could possibly snag a rate two percentage points lower than his current rate.
And I’m sure he would receive the most favorable terms, given his income, assets, employment history, etc. Being the U.S. president is pretty helpful.
Let’s do the math to see what he could save, using $600,000 as the loan amount.
Loan amount: $600,000
Current rate: 5.625%
Refinance rate: 3.75%
That’s a monthly savings of roughly $675, or $8,100 annually.
Not a bad haul for a making a phone call and submitting some paperwork.
Obama Should Check Out 15-Year Fixed Rates
But since they’re already seven years into a 30-year mortgage, and have presumably paid a ton of interest, it would probably suit them best to take a look at a 15-year fixed mortgage instead.
Rates on the 15-year fixed are closer to 3%, so assuming the Obamas can snag a rate at 3% even, their monthly payment would climb nearly $700 to $4,143.49, which I’m sure they could afford.
But they’d pay less than $150,000 in interest over the entire duration of the new loan, which would definitely save them some money. Probably a few hundred thousand for that matter.
And they’d own their house sooner, preferably before retiring.
So President Obama, if you’re reading this, you may want to consider shopping around for a refinance.
Don’t Be Lazy
All jokes aside, the takeaway from this story is that there are a ton of homeowners out there that don’t take the time to shop their mortgage rate.
Yes, it’s a pain in the you know what, and it may all seem rather daunting, but think about all the other “stuff” you subject yourself to in order to save a few bucks here and there.
In the grand scheme of things, you could save a ton of money while putting in a very little amount of work.
So if you haven’t refinanced yet, grab a calculator and take a look at rates to determine if it’s the right move for you.
Read more: When to refinance a mortgage.