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Does It Pay to Refinance Your Mortgage?

Mortgage interest rates are still extremely low and it may be the perfect time to refinance. You may have even refinanced several years ago and are now considering a mortgage refinance again because rates have fallen so low and you're afraid they're going to rise. You should consider the following:

1. Amortization.

In the early years of your mortgage, you pay more interest than principal. Run the numbers and calculate how the principal will decrease in the early years of a new loan.

2. Closing costs.

Based on what you'll save with the new, lower mortgage, figure out how long will it take you to recoup the closing costs?

3. Points.

If you paid points for a lower rate on your current mortgage, that money is lost when you refinance.

4. How much longer you are planning to stay in the house.

It's not worth the cost of refinancing if you'll be selling before you can make that money back in savings.

5. Equity.

Would you like to pay off your house faster? You may consider going to a shorter term: 5, 10, or 15 years. Many times the interest rates are even better.

All in all, the decision to refinance should be based on more factors than just the interest rate or monthly payment. Call us at 970.330.3900 to schedule a free consultation.