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Breaking Even On Your Refinance
(presented by www.refinance-refinance.net - mortgage lenders)



By Ben Afzal

Loan Factors

Here are some basic mortgage loan expenses:

  • cash out
  • loan closing costs
  • new loan balance
  • new loan term in years
  • new interest rate
  • new monthly payment
  • monthly savings

Cash Out

This is the most basic factor to include. This is often a borrower’s primary motive in doing a refinance.

Loan Closing Costs

These are the closing costs for getting your new loan. These include lender charges as well as any prepayment penalties.

New Loan Balance

This is the new loan balance you have after you add your old mortgage balance, additional cash taken out, and your closing costs.

New Loan Term In Years

This is the time frame for your new loan. If you switch to a 50 year term your monthly payment may go down even though your total loan size has gone up. This is because the longer you take to pay a mortgage back the lower your monthly payment will be.

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New Interest Rate

This is the new interest rate you are being offered.

New Monthly Payment

This is your new monthly payment. If you take a lot of cash out on your new loan you may end up with a higher monthly payemnt.

In this case, there is no “break even” because you have increased your monthly mortgage payment instead of decreasing it.

Monthly Savings

This is the decline in your monthly payment. You can divide your monthly savings by your total closing costs to see how long it will take you to break even.

For example, if your monthly mortgage savings are $500 per month and your closing costs are $5,000 then you will break even in 10 months ($5,000 closing costs divided by $500 per month in savings).

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For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
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This entry was posted on Wednesday, October 4th, 2006 at 2:13 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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