Question by julie: questions about refinancing home mortgage? ?
with the fed cutting the rates so low, now would be a good time to think about refinancing right? my mortgage interest rate is currently 6.25 fixed, i think we owe about $ 95,000 on it. my husband and i have excellent credit, and we’ve been in our home for 5 years. would refinancing lower our monthly payment significantly, how much does it cost to refinance?
oh weve also paid our mortgage through march, so how would that work if we did decide to refinance?
Answer by buz
Refinancing basically resets your mortgage to 30 years again, and there are refinancing costs. The bank here that usually has the best mortgage rates is offering a 30-year 5.25% fixed rate (which would make the monthly payments about $ 525.00), with closing fees of $ 2,308.75. Since the monthly payment on $ 95,000 at 6.25% is about $ 600.00, it’d lower your payment about $ 75/month, but it would take you about 2.5 years to recoup the refinancing costs.
Give your answer to this question below!
Quit thinking “Monthly Payments”. The banks want you to think that way. It is only a 6.25% interest rate if you pay it off in the first year of the loan. Sure your payment would lower but your balence on the house would not. Instead of paying the bill early, pay extra money on the principle. Your paying 90% interest on the monthy statements. Dont pay early, pay extra only to the principle. This wont lower your payments but it will lower the amount that you owe on the home.