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Monday, August 24, 2020

Should You Refinance Your Mortgage Now?

 


Should You Refinance Your Mortgage Now?

You probably have been hearing the news about the interest rate being historically low right now. What is current interest rate for your mortgage loan? 4%? 5%? 

The most common reasons to refinance are;

- to lower interest rate

- to reduce the length of mortgage

- to make home improvements or cover other expenses

- to lock in a constant interest rate if you have an adjustable rate mortgage (ARM)

- to convert to an ARM to lower monthly payments,

While all the above refinancing reasons are reasonable, there are many factors to consider. This process, as you already know, is time-consuming and often expensive.

First, you should calculate your savings by figure out the following numbers;

- Your current monthly payment

- The original cost of the home

- An itemization of refinancing costs

- Monthly payment after the refinance

- Length of time you plan to live in the house after the refinance

- The amount still owed on the house, and the break-even point (calculate this by dividing the total cost of the refinance by how much you’ll save each month on your payment.).

Depending on your ultimate goal in refinancing, the above numbers should give you a good idea of whether or not it makes sense. If it is confusing to you, there are many online “calculators” that can assist you in investigating refinancing like Mortgage.net for example.

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