New York Mortgage Company

Archive for the ‘Mortgage Refinance’ Category

Every day you think about refinancing with out acting on it can add up to $100’s per month. If you don’t act on it at all it can cost you $1000’s per year and $10’s to $100’s of thousands per life of loan. We promise to give you options to choose from that will surprise you when you realize how much, in comparison, you are over paying by on your existing mortgage.

Is refinancing the best way to go for you?
Believe it or not, there may be times when you can get a lower interest rate and even a lower monthly payment, but financially it would be wiser in the over all picture to decline re-financing. Here’s an example: You plan on selling your house within the next 5 years. You decide to re-finance, and lower your expenses by $100 a month on a fixed rate, 30 year mortgage. Your closing costs come out to be $7000. This loan in actuality would cost you $1000.

For this example, a 5 year adjustable mortgage with a lower interest rate would be a much better choice. The rate would not start to adjust until after the 5th year (by which time you would be selling the house anyway). This is a very simple example but the point we’re trying to make is that you shouldn’t just look at monthly savings. You have to look at the overall financial status over the life of the loan. A good mortgage professional will weigh your options for you and ask the right questions to see your overall status. However, you should always be aware of your own status and options, since (unfortunately) some brokers are only interested in getting paid at the closing and don’t care if you are getting the right deal or not.

Here’s a very helpful formula to use when comparing mortgages; whether it’s a new mortgage compared to an existing one, or a new proposed mortgage compared with another new proposed mortgage. This will help you make the best decision for your specific situation.

Monthly principle and interest (not including Taxes and Insurance)
X Months left on mortgage** (30 YR=360months, 20yr=240months, etc.)
= Total cost of mortgage

**Be careful when calculating existing mortgages to know exactly how many months remain on that term

Note: Compare the total cost of all mortgages

If you are confused in any way by this calculation, and would like an explanation of this formula in greater detail, please contact me and let me know of your specific question. I will be pleased to help you understand exactly how to calculate and compare mortgages.

For the most part though; if you lower your interest rate and your monthly mortgage payment goes down, you’re most definitely making the right choice. This example was simply meant to help you become aware of more then just the interest rate. It was meant to help you realize that you must be aware of the overall picture.
Think of your plans for the future, and what your goals are for refinancing. Then, you can go from there.

** Also read sections: Lower my mortgage term, Debt Consolidation, Mortgage Rates and Credit scores.