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CalSTRS 80/17 Refinance Success Story

CalSTRS Refinance OptionOne of the highlights of the CalSTRS 80/17 home loan was that the second mortgage allowed you to buy with only 3% down and no mortgage insurance.  Add to that the fact that the payments on the second mortgage did not have to be made for the first 5 years of the loan!

Since interest rates have plummeted to historic lows in 2012, what was once the CalSTRS 80/17’s greatest benefit is turning out to also be it’s biggest challenge.

We’ve talked about some of the limited options for refinancing an 80/17 in the past, and now we’re starting to see some success stories.  Here is one recent story I would like to share:

Current CalSTRS 80/17 Loan

Original 1st Loan Amount:  $404,000

Payment:  $2,231.00/month payments not including taxes and interest

2nd Loan Amount after 5 Years: $108,400

 Payment: $649.50/month payments to beginning 2016

Interest Rate on Both Mortgages: 5.25%

After 5 Years, Mona’s total mortgage payment would have been $2,880

After Conventional Refinance

New Conventional Loan Amount:  $504,000

New Total Payment:  $2,298.50/month not including taxes insurance

The end result is that by paying off the 2nd mortgage early, saving the accrued interest on the second mortgage and combining both loans into a new, non-CalSTRS conventional loan saves Mona $581.00 a month!

Refinancing now reduces payment $581 a month!

Fine Print

Mona did have to purchase private mortgage insurance due to having less than 20% equity, but even with that she still lowered her payment substantially. Bottom Line

If you are in a CalSTRS 80/17 and have questions, there may be options.  If you have any questions or would like me to run the numbers on your loan, you can leave a question or comment below or contact me directly.  My information is in the author box below.

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