I thought refinancing my home could save me money, but after doing the math I found it wasn’t worth it after all
- I recently considered refinancing the mortgage on my new home but ultimately decided against it because the math didn’t make sense.
- If I rolled closing costs into my new loan, my monthly payment would have gone up.
- I considered paying the closing costs up front, but a formula showed me I wouldn’t reach my break-even point for eight years, and that was way too long for me.
If you’ve been following the real estate market at all recently, you’ve probably heard that interest rates are at historic lows and, as a result, everyone and their mother is trying to refinance their mortgages right now.
The truth is, refinancing can be a great way to save money. It can help you lower your monthly payment and change the terms of your loan into ones that are more favorable for you. That said, refinancing right now is not for everyone.
Put simply, the math doesn’t always work. In fact, I recently tried to refinance the loan on my new house and, after looking at the numbers, I decided to keep my current mortgage.
With that in mind, let me walk you through the reasons why I knew refinancing wasn’t a good choice for me and how to do your own refinancing math to figure out if it makes sense for you.
By Tara Mastroeni