Refinancing can save you hundreds of thousands of dollars
As our attention has become focused on the current tough economic patch, many are missing a great opportunity to save tens or even hundreds of thousands of dollars via refinancing.
Mortgage rates today are at historic lows. They have dropped for six weeks in a row and the benchmark 30-year fixed-rate mortgage now stands at 4.35%, according to Bankrate.
The Bankrate.com survey also shows the benchmark 15-year fixed-rate mortgage at 3.48%, the lowest number they have ever recorded.
There is now a flood of homeowners seeking out 15-year refinance deals in order to save big.
Here how it breaks down. If you have a 30-year mortgage anywhere above 4% and you are in the first decade of your mortgage, it’s almost a no-brainer. Do the math and seek refinancing if it works out.
The monthly payment would be $1,767 and the total paid over 30 years would be $633,453. After 3 years, the loan balance is $290,039.
Refinancing after 3 years at at 3.25% for a 15-year mortgage results in a new monthly payment of $2,121 and new total of $381,842, plus 36 past payments totaling $63,612 or $445,454.
Although our homeowner would see an increase of $354 in monthly payments, they would still be savings of $188,000, minus a few thousand dollars to refinance.
Is is worth it? Absolutely! Many are put off by the huge amount of documentation involved in a refi, plus appraisals etc. However, just do the math. A couple days work for potentially several hundred thousand dollars? Where else would you get such a bang for your buck?
Use our calculators to do the math, consult your financial adviser, and if it works for you, refinance before those rates head back up!
You can find some of the best rates here.
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