There are many reasons to refinance. If you have enough equity, you maybe able to take cash out to use for other purposes. If you can afford a higher monthly payment, you may want to refinance to a shorter loan term to save thousands in interest. However, the most common reason is to possibly obtain a lower interest rate and reduce your monthly payments. In this case, the decision to refinance should be based on lowering mortgage costs and breaking even in a reasonable amount of time.
Time to Refinance?
Time to Refinance?
Current Loan
Loan Amount
$ 175,000
Monthly Payment
$ 1,250.00
New Loan
Loan Amount
$ 176,500
Monthly Payment
$ 936.73
By refinancing, you will save $313 per month. Based on those monthly savings, it will take you 5 month(s) to recover your closing costs and break even on your refinancing.