For example: If you pay $3K in closing costs on a refi and your monthly payment goes down $100 per month it will take you 30 months to start saving money, i.e. the break even point. If you are going to be in your house for more than 30 months then it makes sense to refi. Plus the savings in decreased interest over the life of the loan.
Another example: If you have been paying on a 30 year loan for 10 years, lets say $165K at 5.5%, then you have already paid $112,422.22 in interest and principle payments and if you paid all 30 years you would pay a total of $337,266.67. If you can refi the remaining principal of $136192.64 to a 15 year loan at 5% interest your monthly payment would increase but the total you would pay for your house including the first loan and the refi would be $318,480.57, saving you about $19K over the original 30 year loan.
But, if you took the second example, and instead refinanced it into a new 30 year loan (again using 5% as an example), your monthly payment would go down, but your total loan payments for first loan and refi would actually come to $385,622.37, costing you about $50K more than sticking with your original loan.
I assumed for these examples that you plan to stay in your house for the life of the loan, if you plan to sell before your loan is up then you should do your own calculations to see whether you will save money or not.
I got these numbers using this calculator: http://www.bankrate.com/brm/mortgage-calculator.asp
It depends on how much your closing costs will be, how much lower your monthly payments will be and how long you plan to stay in the home.
For example, if your closing costs (minus taxes) are $1,500, and you can save $150 a month in interest and principal payments, you would have recouped the closing costs in 10 months - a pretty good scenario, if you don't plan to move in 10 months.
When you refinance your home mortgage, you can pay off your first mortgage, so you can decide anew on a shorter loan term that is more applicable to you. Also, many homeowners choose to do home refinance to get a more reasonable interest rate on their loan, or to pay off their first or second mortgage loans.
Below site may provide some important insight for you...!
Good Luck...!
Usually when the rate drops a full 1 1/2 percentage point.
0 ความคิดเห็น:
แสดงความคิดเห็น