Should I Refinance My Mortgage?
People are always asking me if they should refinance their mortgage or if its the perfect time for them to refinance. Well there are a few different factors that should be considered and it will be easy for you to make that decision on your own.
There are a lot of interest calculators on my website and I recommend using all of them. Not for this calculation but in general, the knowledge will help you a lot with your mortgage payment.
The first thing to do is to get the current interest rates and compare them to your mortgage rate. Obviously it must be less and probably in the range of 1% less depending on the size of your mortgage.
Then you can use my standard mortgage calculator to compare the two mortgage payments. Refinancing will cost you about $1500-2000 so you would like to save about $100-200 per month in order to make that money back quick enough to start saving.
Depending on the amount of time you would like to stay in your current home, or own your home and rent it, you will need to make this decision on your own. If the calculator shows you that you will save $200 per month then I highly recommend it. you will make you money back in a year or so and start saving a lot on interest payments.
Your borrowing power doesn't completely come into play hear. You already have the mortgage so they can really say that you can't afford to borrow that amount. Especially if you are paying the bank to refinance your mortgage and getting a lower monthly payment. It only means you can borrow more in a different area because your monthly borrowing power will decrease by the amount that you save.
