Refinance Mortgage - Blog del Euribor
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Refinance Mortgage

When you refinance, you pay off your existing mortgage and create a new one. You may even decide to combine both a primary mortgage and a second mortgage into a new loan. Refinancing may remind you of what you went through in obtaining your original mortgage, since you may encounter many of the same procedures–and the same types of costs–the second time around.

  • If you had a $200,000 30-year mortgage with an 8 percent interest rate, your monthly payment would be $1,468.
  • If you refinanced at 6 percent, your new monthly payment would be $1,199, a savings of $269 per month.
  • Assuming that your new closing costs amounted to $2,000, it would take eight months to break even. ($269 x 8 = $2,152).

If you planned to stay in your home for at least eight more months, then a refi would be appropriate under these conditions. If you planned to sell the house before then, you might not want to bother refinancing.

Conclusion:

  • The decision to refinance should only be made if the long-term savings outweigh the initial expenses. To calculate your break-even point, divide the cost of the refi by your monthly savings. The resulting figure represents the number of months you will need to stay in the home to make the strategy work.
  • Don’t select a new mortgage based only on its annual percentage rate.
  • Also evaluate the term of the loan, whether the interest rate is fixed or variable, and the relative merits of paying up-front fees in exchange for a lower rate.
  • Your current lender already knows you and has your financial information on file, so you may be able to get a better deal that way, instead of going to a new lender.
  • To get the best possible refinancing deal, you’ll need to shop around, crunch some numbers, and ask a lot of questions.
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Escrito por Carlos Lopez el 24 de enero de 2012 con 0 comentarios.

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