There are many reasons you might choose to refinance your home mortgage. Mortgage interest rates have plummeted, and there may be some people who feel like they “missed the boat” on getting a low rate on their home loan. That’s where refinancing could come into play.


Is a Refi Right for Me?

Refinancing your mortgage requires you to pay lenders' fees and closing costs (typically around 2% to 5% of the loan amount), just like a regular home loan. Is it worth the money?


A Refi May Be Worth It If:

  • You’ll get an interest rate at least 1% lower than your current mortgage.

  • Your ARM is about to reset.

  • Your credit score is in the 700s or above.

  • You have at least 20% equity in the home.

  • You have a low DTI ratio.

  • You’ll still be in the home when you reach your break-even point.


 Calculating Your Break Even Point

1. Add up all the loan fees.
2. Determine your monthly savings with the new lower payment.
3. Divide costs by savings to get the number of months until you break even (you start saving more than you spent).

 

Loan Fees:

$4000

Monthly Savings

$100

$4000/$100 = 

40 Months or just over 3 years to recoup the fees.

Note: It may be possible to roll your fees into the new mortgage, but don't let that dissuade you from doing your due diligence and checking your numbers. 

Rates are at historic lows. Contact us today at 888-254-9500 and ask to speak with a Mortgage Specialist. We can review your current mortgage, your housing plans, and your finances so you can decide if refinancing is the right decision for you!

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