Tuesday, November 29, 2011

A Different Reason For Refinancing Your Home

Sign of a mortgage centre in East LondonImage via WikipediaWith interest rates at historical lows, refinancing is on the minds of many homeowners. Weighing the benefits against the costs is the only way to determine if it makes sense. We all are looking for that lower mortgage payment so we can use the savings for other things, it's the usually the only reason that someone refinances their home. But maybe there is another way to think about it?

When thinking about refinancing, a better way to weigh the decision is to evaluate the "net benefit". Net benefit represents the overall impact on your personal wealth from refinancing your home mortgage. With that in mind, CreditSesame.com has an infographic spotlighting a new way to think about refinancing your mortgage.

The infographic explains net benefit and an example case study of a proposed refinance. In the infographic, the proposed mortgage refinance has the homeowners making a larger payment over a shorter term. Raising your mortgage payment sounds counter productive but for the example, it actually doubled the net benefit and equity of the home for the home owners.

Should I Refinance My Mortgage? Here’s a New Way to Think About It [Credit Sesame]


  1. As a rule of thumb, the best time to refinance is when the interest rates go down by at least two points. But sometimes, even a 1 percentage point drop in rates could still afford you a relatively good deal. If you try to get a new lender, they might agree to a reduction of points or entirely waive off the application, title check and credit check fees.

  2. There are a lot of good deals these days on mortgages and refinances. I am at 5 percent on my mortgage, I wonder if it is worth refinancing if I could get 4 percent? Closing costs are a problem. But maybe it would be a savings if I stay in my house for ten years


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