Industry News – To Re-Fi Or Not To Re-Fi, That Is The Question

Industry News - To Re-Fi Or Not To Re-fi, That Is The Question

Did you know that there is almost nothing that will affect your monthly mortgage payment as much as the interest rate that you pay?

It’s true!  Even with all of the talk that you see in the media and all of the marketing that mortgage companies do, some people are still paying a higher interest rate than they could be paying and that could potentially cost them tens of thousands of dollars over the life of their loan.

Given that interest rates are likely to rise in the next 6 months, this may be one of your last chances to refinance at historically low interest rates.   As a general rule of thumb, if you are going to stay with a 30 year fixed rate mortgage, then you probably need to save about 1% for the refinance to make sense over the life of the loan.

But let’s say you really don’t want to extend the length of your mortgage and in fact want to be a “Mortgage Warrior!” and cut years off the end of your payments.  What does that look like?

Let’s do an example.  If your current mortgage is for $200,000 and you refinanced 3 years ago during the refinance boom at a rate of 4% fixed for 30 years, then your payment would be $954.83 per month (not including taxes and insurance).

If you were to refinance that loan for 15 years at an example rate similar to today’s rates of 2.75%, your new payment would be $1357.24 per month (again, excluding taxes and insurance).  While your payment goes up, you will be cutting approximately 12 years of payments off of the end of the term resulting in a savings of over $65k or “YUGE” as The Donald would say.

For you math buffs, here’s the calculation:

Current Mortgage Payments Total:  27 years x 12 payments per year x payment amount = 27 x 12 x $954.83 = $309,364.92

Proposed New Mortgage Total Payments:  15 years x 12 payments per year x payment amount = 15 x 12 x $1357.24 = $244,303.20

For a Grand Total Savings of:  $65,061.72

That’s a lot of dough!  The only caveat is making sure you can afford the higher monthly payment.  If you can, then it may make sense for you to refinance your mortgage.

If you’d like to know more about refinancing, give me a call today!  I’ll connect you with one of our preferred lenders that can fill you in on the details and consult about your own personal situation.

Helping YOU is What We’re Here to Do!

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