Mortgage Refinancing - Save Thousands of Dollars in Interest
Consider mortgage refinancing if you are looking to: lower the interest rate on your mortgage, reducing your monthly payments and overall cost, reduce the term or length of your loan, doing so can save you thousands of dollars in interest, or provide a means of consolidating your debt.
Going through the process
All of these are excellent reasons to pursue refinancing, but several issues should be considered first. Refinancing is similar to the process you encountered when you closed on your first mortgage. It requires an application, credit check, new survey and title search, as well as an appraisal and inspection fees. As you know, this process can be quite lengthy and expensive.
Aim to Lower Percentage Points
As a rule of thumb, mortgage refinancing pays if you can get an interest rate at least two percentage points lower than what you are currently paying. However, every situation is different.
Some lenders are offering reduced fees or no points. Asking yourself a few questions may help you determine if you can save money:
• How much can I lower my current monthly payment?
• How long do I plan to stay in the house after I refinance?
• How much will I pay in refinancing costs?
Figure out your break even point
Next, figure out what you still owe on the mortgage on the house, how much you´re paying each month, and how much you initially paid for the house. Itemize all the expenses of the refinance and estimate your new monthly payments. With this, you can figure out where you break even and when you begin saving money.