How Long Should You Wait to Refinance After Purchasing Your Home

Must Read

Business continuity planning: a byte of prevention is worth a gigabyte-Care

Business continuity planning is a term popular in the last two decades and has to plan the design, if...

Student Loan: A Way to Fund Your College Expenses

If you are a student and you have a hard time paying for your tuition fees and any other...

Unthaw Frozen Home Equity Lines of Credit

You may have taken out a home equity line of credit to help you cover the expenses of life...

Refinance Home Loan – One Big Reason to Get One Now

With the decline in interest rates, it is the right time now to get a refinance home loan and...

Cyber Monday 2010 Deals on Computers – Amazon Sales Ad to Be Released in November

Over the next several weeks it will be the case that millions of Americans start to look for Cyber...

Free Government Debt Consolidation Loans – Can the Federal Bailout Stimulus Programs Help Me?

A large number of Americans use credit cards for everyday expenses and this is one the reasons why they...
Admin
test

The most common reasons for refinancing a mortgage are to lower the monthly mortgage payment and to lower the interest rate. There are a couple of things to consider when you have purchased a home and are considering refinancing. You need to consider how much money you are really going to save when you take into consideration that you have to pay closing costs and other fees in order to refinance.Seasoning PeriodMost lenders have a clause, which is referred to as the “seasoning period.” This means that you cannot refinance your mortgage until after the first or second year that you have lived in the home.Early Payoff PenaltyAnother cost factor that you need to be aware of is that your existing mortgage lender may charge you a prepayment penalty for paying your mortgage off early. If you refinance into a new mortgage, the existing mortgage is essentially paid off with the new mortgage and some lenders charge fees for this. Fees can range greatly, but are usually calculated as a percentage of your mortgage amount, which can cost you thousands of dollars.Closing Costs & FeesSo before you refinance your mortgage it is important to calculate how long it is going to take you to breakeven or to recoup the amount of money that it is going to cost you to refinance (closing costs, prepayment penalties, etc.). This is especially important to calculate if you do not plan on being in the home for an extended period of time. As long as you recoup all of the costs that you will have to put into the refinance before leaving the home, then it may be a good time to refinance.Breakeven Analysis FormulaTotal amount of savings per month = # of months to breakeven
Total amount of refinance costs

Latest News

Digital Marketing for Beginners

Digital marketing for starter, Let to basic learning about connecting with your audience in the right place at the...

More Articles Like This