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Does Refinancing Save Me Money |
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Does refinancing to a new lower interest rate or a shorter loan term save you money?
 Lower interest rates mean lower monthly payments - If rates are lower since you took out your mortgage, refinancing may get you a lower interest rate. Monthly payments go down due to the combination of lower interest rate and new termo of the loan.
Will refinancing "REALLY LOWER" save you money? That depends on the time you expect to live in the respective home and the cost of refinancing. The key question lies on how long does the newer loan amount take to provide you a break even point between the old mortgage dollar and the new lower refinanced dollar amount.
Example: Current Monthly Mortgage Amount: $1,500 Cost of Refinancing $5,000 New Refinanced Monthly Mortgage: $1,350 Monthly Savings $150 Breakeven Point 5,000 / 150 = 33 (33 Months) |
