When you’re thinking about refinancing to save on interest, you’re probably thinking about getting a lower interest rate.
There's more that factors into the amount of interest you pay than just the rate. You can maximize your savings by refinancing into a shorter term, changing your loan type or making extra payments.
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!
With the goal of reducing the amount of interest you'll pay, refinancing presents a great opportunity for savings.
With a lower interest rate, and by shortening the term of the loan (and making fewer total payment) , you can reduce the overall amount of interest you'll pay over the life of the loan.
But not every situation will benefit from a refinance, and it is important to ensure refinancing makes financial sense. There's a few key details to think about as you consider refinancing:
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% respectivly. 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.