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Refinancing a mortgage can be a smart financial move, but for those with high-balance loans—like those exceeding $1 million—the stakes are higher. Many borrowers worry that refinancing means resetting their loan term, potentially extending their debt horizon by decades. However, there are flexible strategies available to avoid this, maintain your financial progress, and potentially save on interest costs.
How to Refinance a $1M+ Loan Without Resetting the Term
Refinancing without restarting the term is possible, but it requires careful planning and the right lender. Here are some key strategies to consider:
1. Use a Shorter-Term Refinance Option
Instead of opting for a new 30-year mortgage, consider refinancing into a 15-year fixed or 20-year fixed loan. This can help you avoid adding decades to your repayment schedule while potentially securing a lower interest rate. Many lenders offer these shorter terms as part of their jumbo mortgage programs.
- Example: If you have 12 years left on your current mortgage, you might refinance into a 15-year loan, maintaining a similar timeline but potentially reducing your interest rate.
- Related Resource: 15-Year Fixed Mortgage
2. Consider a Custom Term Refinance
Some lenders allow custom term refinancing, where you can pick a term that matches your remaining years. This flexibility is less common but can be a great option if you’re determined not to extend your payoff timeline.
- Related Resource: Loan Comparison Calculator
3. Use a HELOC or Home Equity Loan
For those with substantial home equity, using a Home Equity Line of Credit (HELOC) or a home equity loan can provide cash without resetting your primary mortgage term. This approach works well if you need funds but don’t want to extend your existing loan.
- Related Resource: HELOC Lenders
4. Explore Cash-Out Refinance Alternatives
Instead of a traditional cash-out refi, which might reset your term, consider a DSCR loan if you’re using the property for investment purposes. These loans focus on the property’s cash flow rather than personal income, offering flexible terms.
- Related Resource: DSCR Loan
5. Use a Recast to Keep Your Term Intact
If you’ve paid down a significant portion of your principal, some lenders offer loan recasting. This option reduces your monthly payment without resetting the clock on your mortgage.
Benefits of Refinancing Without Resetting the Term
Refinancing without resetting the term can help you:
- Save on interest over the life of the loan.
- Maintain your original payoff date.
- Build equity faster.
- Reduce overall interest costs.
Is a Jumbo Loan Refinance Right for You?
If your loan exceeds the conventional limits, you’re likely looking at a jumbo loan refinance. These loans have unique qualifications, including higher credit score requirements and lower loan-to-value (LTV) ratios.
- Related Resource: Jumbo Loan
Frequently Asked Questions
Can I refinance without resetting my term?
Yes, by choosing a shorter-term refinance or a custom term, you can avoid restarting your mortgage clock.
Are there fees for recasting a loan?
Yes, most lenders charge a modest fee for recasting, but it’s often less than the cost of a full refinance.
Is a HELOC better than refinancing?
It depends. A HELOC can offer more flexibility without resetting your term, but it may have a variable interest rate.
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Final Thoughts
Refinancing a $1M+ mortgage without resetting the term is achievable, but it requires strategy and the right financial partner. Consider your long-term goals, current interest rates, and available equity before making a decision. Ready to take the next step? Explore your options today and make your money work smarter for you.
Get Expert Financing
- Matched with investor-friendly lenders
- Fast pre-approvals-no W2s required
- Financing options fro rentals, BRRRR, STRs
- Scale your portfolio with confidence
Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
