Ask the Lender – “Am I better off refinancing?”

With interest rates currently at historic lows, the quick answer to this question is probably yes. But in order to make sure refinancing makes sense for you and your situation, you need to ask yourself these questions:
How long will I be in this home?
Do I plan to payoff my current mortgage early?
How many years do I have left on my current mortgage?
How much do I owe on my current mortgage?
What will the cost be to refinance my current mortgage?

Let’s say you have plans to move or relocate within 4 years. If the monthly savings you gain from a lower interest rate does not cover the cost of refinancing within 48 months, then you are wasting your time and money refinancing your current mortgage.

If you have been paying extra each month on your existing mortgage and you have less than 10 years left to pay, you really need to do some number crunching to determine if the savings is worth the cost of refinancing. You may determine that even though you are lowering the interest rate significantly on your existing mortgage, the savings will not outweigh the costs.

The cost of refinancing is the same regardless of the amount of the loan; whether it’s a $300,000.00 mortgage or a $25,000 mortgage. The resulting savings however is much different. It may cost you $1,100.00 to refinance. On a 15 year term, the savings over the life of a $25,000.00 mortgage may only be $1,500.00. Whereas, the lowered interest rate on a $300,000.00 mortgage may save you thousands of dollars over 15 years.

Some people think that you have to drop your rate by 1% or more in order for refinancing to be worth your time but that is not necessarily the case. You will need to answer the above questions and take a close look at your situation. Our website offers a calculator that can aid you in determining if refinancing is right for you, http://partners.leadfusion.com/tools/cnbohio/home11/tool.fcs. If you’d like to discuss your options, call your local CNB office and ask to speak with a mortgage lender.

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