how do i know refinancing will be affordable?
TRANSCRIPT
Are you trying to improve your monthly cash
flow?
Are you hoping to pay off your loan at a
certain date?
Do you want to shorten the remaining term
of the loan in order to save money in the long
haul?
When refinancing your mortgageyou need to first decide whatyour goal is:
After determining the goal of yourrefinance,next you need to do is,
Differential between your existinginterest rate versus the new rate inconsiderationHow far along you are in your existingmortgageHow long you plan on remaining in thenew mortgageHow much it will cost you to get the newmortgage
Improve cash flow
Cash flow improvement is usually best
achieved with both a lower interest rate
AND a re-lengthening of the remaining
term to 30 years.
Look beyond fixed-rate mortgages to find
even lower rates on adjustable-rate
mortgages with shorter fixed-rate periods
Save money for long term
Look to a shorter-term loan, such as 20-year,
which would likely bring some break in rate
while chopping three years off your remaining
term, which creates tremendous savings
Consider the cost
Then there are the costs of refinancing. If you
pay them in cash, out-of-pocket, you'll need to
be in the new mortgage long enough to not only
recoup what you spent but also to get some
actual savings.
You can pay costs by burying them in the loan
amount (called a "low-cash-out refinance") or
trading them off for a slightly higher interest
rate; this can make your savings start as soon
as your refinance is closed, but the difference
in monthly payment from old loan to new will be
smaller.
Consider the cost
Thank you.
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