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Is It Time to Refinance Your Home Again?

September 24, 2010 | | Comments 0

homeowner looking at houseEven if you refinanced recently, you may want to look at doing it again. Rates are at an all time historical low. Even reductions of a half-percent will save you thousands of dollars over the life of your loan. The Equifax Personal Finance Blog recently ran an article, “

Should I Refinance Now?” that will help you take a hard look at the numbers before you decide if another refinance is worth it. Real estate expert Ilyce Glink talks about her experience refinancing and her thought process as she considers refinancing for the second time in less than a year.

A major consideration is the cost of the refinance versus what you will save each month. To make the math easy, let’s say it would cost you $1,200 in closing costs, but you would save $100 a month. You break even in one year.

If you’ve refinanced in the last year, think about how much you’ve paid in interest since you refinanced. Because you pay more interest each year at the beginning of your loan, Glink says you’ve likely already paid thousands. If you refinance now, you’ll lose the year you’ve already paid. It will now take you a year longer to pay off your loan, plus it’s as if you’ve lost the money you’ve already paid in interest.

Glink’s plan to make this work out better is to put some of the monthly savings toward one extra mortgage payment each year. In her case, one extra payment per year will knock one year off of the loan. With the savings in interest, pre-payments on her loan, and subtracting the interest she “lost” in the last year, she figures that she still stands to save several thousand dollars.

How about you? To learn more about Glink’s thoughts on refinancing, visit the

Equifax Personal Finance Blog. She has links to follow, many more articles on real estate and finance, and an opportunity for you to ask questions.

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