The process of refinancing is similar to that of closing on your first mortgage. It necessitates the submission of an application, a credit check, a new survey and title search, as well as appraisal and inspection fees. As you are aware, this procedure can be time-consuming and costly.
There are several reasons to refinance your home, including: lowering your mortgage interest rate; lowering your monthly payments and overall cost; reducing the term or length of your loan, which can save you thousands of dollars in interest; and to assist you in debt consolidation.
All of these are compelling reasons to pursue refinancing, but several issues must be addressed first.
As a general rule, refinancing makes sense if you can get an interest rate that is at least two percentage points lower than what you are currently paying. Every situation, however, is unique. Some lenders are offering lower or no fees. A few questions to ask yourself can help you determine if you can save money:
1. How much can my current monthly payment be reduced?
2. How long do I intend to stay in my home after refinancing?
3. How much will refinancing fees cost me?
Next, determine how much you still owe on the house, how much you pay each month, and how much you paid for the house when you first bought it. Itemize all of the refinance expenses and calculate your new monthly payments. With this, you can figure out where you break even and when you begin saving money.
Use the Mortgage Refinancing Calculator below as a guide to help you through this process. Calculator will appear in a new window.
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