How to decide whether to refinance


How to decide whether to refinance
By Scott Rogers • November 6, 2008
Reproduced with the permission of Mortgage-X.com It's anyone's guess what interest rates might do in the next 3, 6 or 12 months, but rates continue to be historically low. Given these low rates, you may be considering whether it would be worthwhile to refinance. Here's a sample analysis of whether "Bob" should refinance, that might be helpful as you analyze your own scenario. Here's what you need to know about Bob.... Home Value = $275,000 Original Mortgage = $212,500 @ 7% for 30 years Current Balance = $200,000 (after five years, thus 25 years remaining) Current Payment = $1,414/month (principal & interest) Refinance Opportunity = 6.25% with a fee of $2,500 If Bob refinances for $202,500 (including the refinance fee estimate of $2,500), his new payment will be only $1,247/month. This means that it will take only 15 months for the savings to have added up to the cost of the refinancing process. ($2,500 divided by the difference in monthly payments) One important note --- Bob lowered his payment by $167/month by refinancing not only because he lowered his rate, but also because he extended his remaining loan term from 25 years back up to 30 years. So, bottom line... Can refinancing your mortgage lower your monthly payment? Absolutely! Can you recoup the cost of the refinancing process? Absolutely! Should everyone refinance if the current rates are lower, or if it would lower their monthly payments? Not necessarily! If an analysis of your current finance/refinance scenario would be helpful to you, please let me know. I can either walk you through some of the basic calculations, or put you in touch with a qualified lender who can. Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
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