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I purchased my condo 4 yrs and 6 months ago at 5.25% 30 yr fixed mortgage. My current monthly mortgage payment is 1381.00. I've been offered re-financing at 4% APR 30 yr fix mortgage and the new payment will be $1296. Is it worth getting the refinancing?

by hye_cho40 from , California. Jun 20th 2014 Reply


Kat Whitman (kat@whitmanmet.com)
#974 ranked lender in California - 8 contributions

Yes - it is worth it to drop the rate but, have you considered a shorter term, if you can afford and qualify for one i.e. 25 year or 20 year loan?

Jun 20th 2014
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Jason Vondrak (jvondrak)
#218 ranked lender in California - 1,741 contributions

Yes, it is definitely worth it to drop the rate and your monthly payment. Over the course of 30 years the savings will really start to add up. Spend some time determining when your "break even" point will be. This will help you confirm your decision. For example, if you know you will sell the home before you reap the savings to make up for the costs involved in refinancing then is may not be worth it. If you know you will be in the home long-term then it definitely is. I would also consider shorter loan terms, such as 15 years, if you can afford the monthly payments.

Jun 20th 2014
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Chris Gummerson (cgummerson11)
#394 ranked lender in California - 648 contributions

Poster mentioned the break even point. That is usally the most important. Like it was already stated, if you plan to sell the home in a short period of time, you may not recover the costs. Also if your new loan saves you $85 a month, how much in loan charges will this new loan cost you? Lets say for an example it costs $3,000 to close the new loan. You are saving $85 a month, but spent $3,000 to make that savings happen. $3,000 / $85 = 35 months. So in this example, you can see if you sold the home before the 3 year mark, you would end up losing money. I am a California licensed loan officer and would be happy to answer any more questions you have.

Jun 20th 2014
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Shaun Weeks (sweeks)
#896 ranked lender in California - 106 contributions

Good Morning,Yes I believe it is because anytime you can save over a 1K per year that will translate into huge savings over the life of the loan. Do you plan on keeping keeping the home for more than 5 to 10 years? You have other options as well depending on what your plans are with the home. No is a good time to make that move.

Jun 20th 2014
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Dave Metsker (DaveMetsker)
#36 ranked lender in Oregon - 2,318 contributions

Yes. And if you pay monthly at the old rate, you will pay off the loan years sooner.

Jun 20th 2014
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