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As long as you intend to own your property past that break-even period, refinancing can be a smart move.
Some people don't like the idea of "starting over" on a new loan for fear of having a longer total time period to pay. In actuality,
missing the chance to refinance when rates are lower means that you would simply have no choice but to continue making your current
payment each month. Instead of doing nothing, why not take advantage of the lower rate and then continue to make the same payment that
you are now anyway?
Why?
What actually happens in this instance is that you shorten the term of the new loan to less than what you have remaining on the current.
You will save substantially as a result, all with making the same payment you are right now. In other words, pay the same, save more and
own your home sooner.
The "Pre-Payment Analysis" provides an example of how extra principal payments will shorten your loan:
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As you can see, deciding to refinance involves more than just looking at the interest rate or the closing costs or the length of the loan.
The total amount of payments saved and of the time it will take to own your home "free and clear" really represent the more important factors.
You could also consider some more sophisticated concepts, such as deciding whether to put your savings toward paying down the loan balance more
quickly or toward other investments.. Your decision starts with this analysis, and I'm happy to have made it available to you.
We can discuss your options and specifics if you’d like. Just reach out using the information at the top of this form.
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