Colli Real Estate

Is it worth it to get my home refinanced?

I keep getting letters in the mail offering to refinance my home. I have 6.0% interest and have owned my home for two years. Currently, my mortgage payment (FHA) is $1206.87, which includes $67 per month Mortgage Insurance Premium, real estate taxes, homeowner’s insurance, etc. The letters I keep getting claim that I would be able to get “as low as” 5% interest. Assuming I could get 5% (I have excellent credit and have never been late on my mortgage), would it be worth it to refinance? Is there any way to figure out approx. how much I would be saving without digging up how much I am paying for homeowner’s and real estate taxes for calculations?
Btw, our mortgage is a 30 yr. fixed.
I don’t really know what my house has done market-wise. Two years ago I bought it for $159k and it appraised at 160k. The city assessment went up the first year I bought it to $124k and stayed the same this year, so… I dunno?

Not really – but the amount you have going into escrow reflects the taxes, PMI and insurance. Dig out your last statement, check your payments and see how much goes to principal and interest.

Now, find a mortgage calculator, plug in your balance with 5% interest due over 30 years and calculate the new P&I. Subtract the new P%I from the old P&I and that is your monthly savings (and in real life, your savings are a little less than that because part of the difference comes from extending the loan payments out another 2 years).

Now divide the estimated closing costs by the difference in payments – that is your payback period. If you plan on living in the house longer than the payback period, it makes sense to re-fi, if you plan on selling before the payback period, you would lose money by re-fi’ing.

One note, if your house has depreciated and you are now underwater, I doubt anyone will refinance your mortgage.

Mortgage Assistance : About APR Mortgage Insurance

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