A Consumer's Guide to Refinancing Your MortgageIf you are a homeowner who was lucky enough to buy when mortgage rates were
low, you may have no interest in refinancing your present loan. Perhaps you
bought your home when rates were higher. Or perhaps you have an adjustable rate
loan and would like to obtain different terms.
Should you refinance? This page will answer some questions that may help you
decide. If you do refinance, the process will remind you of what you went
through in obtaining the original mortgage. That's because, in reality,
refinancing a mortgage is simply taking out a new mortgage. You will encounter
many of the same procedures and the same types of costs the second time around.
Would Refinancing Be Worth It?
Refinancing can be worth while, but it does not make good financial sense
for everyone. A general rule is that refinancing becomes worth your while if
the current interest rate on your mortgage is at least two percentage points
higher than the prevailing market rate. This figure is generally accepted as
the safe margin when balancing the costs of refinancing a mortgage against the
savings. Click here for the full document (PDF).
|
Refinancing Savings On A $100,000 Loan
|
|
Your Present
Mortgage Rate
|
|
Current
Monthly
Payment
|
|
Monthly
Payment
@ 8.0%
|
|
Monthly
Savings
@ 8.0%
|
|
Annual
Savings
@ 8.0%
|
|
|
|
|
|
|
|
|
|
|
|
14.0%
|
|
$1,185
|
|
$735
|
|
$451
|
|
$5,412
|
|
13.5
|
|
1,145
|
|
|
|
411
|
|
4,932
|
|
13.0
|
|
1,106
|
|
|
|
372
|
|
4,464
|
|
12.5
|
|
1,067
|
|
|
|
333
|
|
3,996
|
|
12.0
|
|
1,029
|
|
|
|
295
|
|
3,540
|
|
11.5
|
|
990
|
|
|
|
256
|
|
3,072
|
|
11.0
|
|
952
|
|
|
|
218
|
|
2,616
|
|
10.5
|
|
915
|
|
|
|
181
|
|
2,172
|
|
10.0
|
|
878
|
|
|
|
144
|
|
1,728
|
|
9.5
|
|
841
|
|
|
|
107
|
|
1,284
|
|
9.0
|
|
805
|
|
|
|
71
|
|
852
|
|
