Refinancing Lower Your Monthly Payment If mortgage rates happen to be lower at the present moment than when they were when the home was originally financed, or if the homeowner decided upon an adjustable rate mortgage accompanied with a lower interest rate than the current rate, the monthly payment will actually go down. That is assuming the homeowner doesn’t shorten the term or the balance increases significantly. When the home owner refinances, that means that monthly payments will be lowered and there will be extra money for those desired extras such as dinners or new clothes. However, that is not the only reason to refinance, but it is possible for the homeowner to not have the funds to bring to the closing table at the end of the initial mortgage loan. Most of the time, all of the closing costs of the initial loan can be placed into a new loan, which means less money will come out of the homeowner’s pocket. Even an interest rate reduction of one-half of a percent can make a difference in the payments that is quite noticeable. Due to the fact that fees associated with refinancing can extend into the thousands of dollars, it is important to go over the numbers and make sure that the home will be occupied by the residents long enough to recover the costs of this type of transaction. For example: If the total closing costs for the refinancing of the loan comes to $2,000 and the monthly payment is reduced by $80, it will require a period of almost twenty-five months to break even. It is important for the homeowner to know if the costs that come with the refinancing are worth it in the long run.
Posted on: Thu, 20 Mar 2014 15:30:50 +0000
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