Is It Time To Refinance Your Mortgage? | Mortgage Teacher

Is It Time To Refinance Your Mortgage? | Mortgage Teacher


There have been many refinance scenarios come through our office over the years, and we're often surprised at how much interest can be saved by refinancing.

When considering a refinance you have to evaluate the Cost vs Return. Typically when refinancing, you will be faced with incurring potential costs such as: penalties from breaking your current mortgage, lawyer fees or appraisal costs. These costs need to be calculated against any savings to ensure that refinancing is the best decision for you. No matter what kind of debt you have, whether it be a car loan, line of credit, credit cards, etc the goal is always to pay off the debt quickly as quickly as possible while paying the least amount of interest. For many clients refinancing can be the best way to reach this goal.

Consider this Scenario:


In this scenario, the client currently owes $315,000 in debt is currently paying $1885 per month and only paying off $8300 in principal per year.

After a refinance the client would now owe $319,000, pay the same monthly payment of $1885 but would not be paying $13,388, an additional **$5088** per year in principal and all debts outside the mortgage have been paid to zero. Therefore, in one year the client will redeem the cost to refinance (penalties, lawyers and appraisal, if applicable) and is now saving on interest every year for the remainder of the term.


Not only would the client be paying off $5088 extra principal per year, they would also be debt free outside of their mortgage. The mortgage loan has a consideribly lower interest rate, charging them much less interest AND all of their debt is rolled into one simple monthly payment.

In additon to paying out debts, refinancing could also help you access home equity, secure a lower rate or put you in a different mortgage product that better suits your current mortgage needs.

To see if you qualify, or if a refinance is a good decision for you, contact a Mortgage Teacher today.

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