Example 1
Bill and Sharon Smith purchased their home 5 years ago for $185,000 and put 10% down. Their present mortgage payment is run on a 30 year schedule at 7.25%. Their present mortgage payment is $1,210 including Mortgage Insurance. They've done some preliminary home work and found their house was worth approximately $235,000. They are considering refinancing at 6.75%. At this rate they'll have no Mortgage Insurance and their new payment, including closing costs will equal $1,043. Their Refinance costs equal $3,789. It would take them approximately 22 months to recoup the costs. Since they plan to stay in the house long term their savings would be $167 each and every month they stay longer than 22 months. If they stayed in the home for 8 years more they would save approximately, $12,358. In this case it is worth the effort to Refinance.

Example 2
Todd and Nancy Kraymer purchased their home 3 years ago and paid $350,000. They put down 20% and took out a $280,000 mortgage at 7.5%. Their monthly mortgage payment equaled $1,957. They credit card debt equal to $62,800 with an minimum monthly payments equaling $1,570 per month. Their total monthly obligations equaled $3,527. The present value of their home is $425,000. If they refinanced their home and paid off their debt and included the closing costs into the loan their new payment would be $2,347...a savings of $1,179 per month. If their closing costs equaled $11,000 their break even point would be 9 months. If they stayed in their home 5 more years, they would end up saving $60,129. In this case it would be worth it for them to refinance.

To Find out if you can save money, feel free to use our Refinance calculator.

NOTE: In the Closing Costs and Cash out Present payment cell, enter "1." This model is run at 7.00% for 30 years and assumes you have good credit and document able income. The total Debt cell includes only all inputted balances. The final figure is approximate. For Final Figures, Contact Us.