When Refinancing Consider Your Personal Financial Obligations

Find out when refinancing makes sense for your bank account.

The nation’s economy is in serious, serious trouble. Unemployment rates are shooting up every month, and no one can say with certainty that their jobs are absolutely assured. So that means people, even those who are still lucky enough to have their jobs, are looking for ways to save money wherever possible. One of the first places where a homeowner will start looking for savings is their mortgage, by refinancing their mortgage with a new and better rate.

By calculating your refinancing opportunities, you will have a better understanding of how different refinancing scenarios will play out in terms of saving you money.

A good rule of thumb when it comes to calculating refinancing of monthly payments is to explore ten or so different scenarios. The mortgage refinancing rates you come up with will give you a sufficient picture of what your savings will look like.

For example, let’s say you have a mortgage. To determine what refinancing your mortgage could end up saving you, experiment with the different aspects of your loan, such as the time terms. Start the ball rolling by finding a mortgage calculator online. Very handy, these mortgage calculators allow you to enter in different numbers in order to quantify any refinancing plan you may be thinking of. Then ask yourself questions that could affect your monthly mortgage payments.

Some questions to consider are:

  • If you get a new 30-year mortgage, will it reduce your monthly payments?
  • Do your monthly payments fall if you enter a new loan maturity date?
  • If, on the other hand, you can put more money into your monthly payments, will it reduce your interest rate, and thus save you money in the long run?

Another option could be to make an annual payment – apart from your monthly payments – that goes to reducing your overall loan amount.

Before you calculate refinancing monthly payments, consider all your personal financial obligations so that you are confident about what you can and cannot afford and then ask the financial representative what your options are. The financial representative will be able to give you tips and suggestions that could make your refinancing experience a smoother and easier one. You may even find that your current mortgage payment plan is actually the best one for your financial needs, but experimenting with different payment scenarios is certainly worth your time.