When you’re thinking about refinancing your current home to lower your monthly payment, you’ll likely have a lot of questions.
A lower monthly payment is typically achieved by refinancing into a lower interest rate, or a longer loan term. Refinancing this way can affect the amount of interest you pay, and potentially cost you money over the life of the loan, so it’s important to consider the total cost when refinancing.
The first thing you should do is discuss your homeownership goals with a Churchill Home Loan Specialist. This is where you’ll get an easy-to-understand cost breakdown with your budget in mind.
Pro Tip: A Homeownership Strategy Meeting is completely free through Churchill Mortgage!
To know whether refinancing is worth it, you need to take into account two things:
The quicker you recover your costs, the sooner your savings starts.
This also factors in how long you are going to stay in your home. If you plan to sell your home before you break even, you might want to stay in your original mortgage.
The Break-Even Point:
When the net savings from your new monthly payment covers the cost of refinancing (closing costs).
When buying a home, you’ll likely have a lot of questions. The first thing you should do is find out how much house you can afford. We provide an easy-to-use calculator utilizing your monthly income with your projected loan term.Refinance Break Even Calculator Extra Payments Calculator
As you begin the refinancing process, you’ll need to gather important documents that are commonly requested throughout the refinancing process.
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Because the interest rate on your home loan is directly tied to how much you pay on your overall mortgage, lower rates usually mean lower monthly payments.
Check out this example of monthly payments (principal and interest) on a 15-year fixed-rate loan of $250,000 at 5.5% and 4.0%.
With a 1.5% difference in interest rate, there was a $34, 827 difference in interest paid! Imagine what you could do with that in your pocket!
* The scenarios listed above have an APR of 5.5% and 4% respectively. Additional fees are not included in the examples above.
With so much of your hard-earned money on the line, it’s best to seek advice from a trusted home loan expert and have the confidence that you are in qualified hands.