so the question that we're asking is when is the best time that you should refinance your mortgage and that answer kind of depends on a couple different factors and that's exactly what we're gonna be going over here in 2022.
WHEN IS THE BEST TIME TO REFINANCE A MORTGAGE
rates are only about 3.6 percent which is extremely low. so honestly if you do have a rate of about 4% or higher it would be worth considering refinancing but there are a couple kinks that we definitely need to cover.
that's what we're gonna be going over. I'll go over all the pros and the cons when it comes to refinancing your mortgage and then on top of that I'm also gonna show you how to do the math for yourself using a loan calculator.
that you can tell when everything said and done if it's gonna be a good value for you or if it's not gonna be.
a lot of the time when you run the numbers you'll actually find that the refinance is not the best value at the time that you want to be doing it and that's exactly why we want to be doing the math.
that you can tell if it's a good value or if it's not just depending up on your situation.
when it comes to refinancing a house I really wish that it was as easy as refinancing a car but it's not it's quite a bit more complicated it takes a lot longer and then on top of that you're always gonna have closing costs associated with the loan.
they're usually gonna be about 1 to 3% of the total loan amount. so just keep that in mind.
typically on a $300,000 mortgage you can expect to pay about 3 to $9,000 in closing costs.
in my experience I found that you're usually going to be paying on the lower end.
usually about three to five thousand dollars on that same number. but that's in my experience and that can all change based on the lender that you're going through and it can also change based on if you're buying down the mortgage rate or anything like that.
really the only way to justify doing a refinance mortage is if you can pay back those closing costs within just a couple years on the money that you're gonna save on interest.
that's really the only way that you want to be doing it because otherwise it's not really a good value.
if you paid about $3,000 in closing costs then you definitely want to recoup that money within just a couple years on your interest savings.
otherwise the refinance mortgage isn't quite worth it. and then on top of that if you're planning on moving within about a year I definitely wouldn't be refinancing because you're never gonna make your money back by the time you move.
if you do decide to refinance your home I would HIGHLY advise that you get multiple bids from different thanks because if you're negotiating with them they're gonna be fighting for your business and a lot of the time you can save a lot of money on closing costs or you can get a better rate.
because you're fighting to get the best option available for you. and when it comes to whether or not a mortgage refinance is going to be worth it for you or not it all depends on the math side of things.
I'm going to show you guys how to do the math using what's called a loan calculator and you can look these up online or you can get them on an app store.
pretty much all work the same they're gonna be free they're gonna be full of ads but they are gonna get the job done and I'm gonna show you how to do that right now.
HOW TO CALCULATE MORTGAGE
so once you're inside the loan calculator the first thing we're gonna need to do is you have to think back and remember how much your original mortgage was.
this doesn't need to be perfectly accurate but it is a good way to tell how we're gonna be as far as a refinance goes.
you can either look this up online or you can call your bank find out exactly what it is.
if you can just remember a ballpark that's fine too. we just want to be close here.
now hopefully that made sense with the math and I don't mean to overcomplicate you guys but it really is pretty simple it just might seem a little bit intimidating with those numbers and what they all mean.
once you fiddle around with those apps it will start to make sense. and I also want to mention right here that a lot of lenders will actually let you go with a higher rate for lower closing costs.
a lot of the time they'll lower your origination fee because you're going with a higher rate and that might not sound good but when you actually run the numbers.
it can make a lot of sense financially because the last house that I refinance I actually went with a higher rate and it was gonna take seven years before that wasn't a good idea based on the amateur ization math that I ran using the same loan calculator.
also keep in mind that if your house has gone up in value then when you refinance your home and you get it reappraised.
if that appraisal comes in higher then you're technically gonna have more equity in your house.
that can be a good thing because if you're currently paying mortgage insurance or what's known as PMI then you can actually get rid of that if you have 20% down on your house.
a lot of the time that 20% can be perceived as your new appraisal amount.
so just keep that in mind if your house appraises for more than it used to then you can technically get out of PMI just depending upon those numbers.
when it really comes down to when is the best time to refinance your home it all depends on the math.
so you are gonna have to plug in those numbers and realize if you're gonna make that up in interest savings over just a couple years versus what the closing costs.
if it is gonna be worth it then definitely go for a refinance because you are gonna save a lot of money over time just not in the short future meaning a couple of years.
So this is all about 'When to refinance a Mortgage & how you can use some online tools to calculate mortgage.