Factoring in the Costs

Once you know what the costs are, it’s a matter of just doing the math. If you’re doing a rate-term refinance with the goal of lowering your payment, simply divide your cost to close the loan by the amount you’re going to save every month.

This will tell you the amount of time to stay in the house in order to break even on the deal. If you see yourself moving before you reach breakeven, refinancing may not be a great option.

As an example, if refinancing lowers your interest rate and saves you $50 per month on your payment, but it has $5,000 in closing costs, you would need to stay in the home 100 months – a little over eight years – to break even. If you were to move out before that point, refinancing isn’t right for you under the terms of that deal. It’s a matter of balancing the cost against both your plans for the refinance and your long-term goals.

Before you break out the slide rule, though, we can help you with this math problem. With Lendia, you can compare a customized mortgage solution with your current mortgage loan in order to quickly and easily see if refinancing makes sense for you. You can also speak with one of our Home Loan Experts at (949) 333-4636.

We also always encourage you to take the opportunity to speak with a financial advisor before making any big moves affecting your future monetary planning.

If you want more information, view our refinancing options.