September 15th, 2019 1:53 PM by Christopher Terry
A common question I get every time mortgage interest rates drop is: "I hear rates are dropping, should I refinance?" And with rates dropping again it's a questions that is asked of me almost daily. So, how do I answer that question?
If your monthly mortgage payment will be less by refinancing then the answer seems obvious, but just because you are saving money does not mean that refinancing is right for you. I believe it's important to consider how long you plan to keep the new mortgage and how much it will cost you to refinance. Let me give you an example. If the cost to refinance is $5,000 and your savings is $50 per month. You would have to plan to keep the new mortgage for 100 months (8+ years) before you would recoup the cost to refinance in your new monthly payment. This calculation does not take into consideration the interest savings on the total loan. There's a link below to help you calculate if refinancing is right for you.
Refinance Savings and Break-even - Should you refinance your mortgage? Use this calculator to determine what your new payment will be, how much you'll save in interest and when you will break even.
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