Refinancing Considerations

If you want to buy a house now or refinance your current home, it's an interesting time in the real estate market. There's a lot of creative financing options available.
If you're considering refinancing, you need to look at up-front costs such as attorney's fees, and closing costs such as title search, appraisal fees, etc. You can get most of these costs included as a part of the refinancing loan, but the monthly payments will be higher.

Is Refinancing Worth It?
There used to be a "rule" in the mortgage industry that said "don't refinance unless you can get, at least, a two percent lower interest rate than you currently have." In today's market, this rule may not necessarily apply. It may be worth it to refinance if there's only a one-half percent drop in interest rates and with the technological advances available in the mortgage industry today, it takes much less time to process a loan application than ever before.

There may be a good reason for refinancing today, even if you get almost the same rate as you currently have. If a home's appraisal shows a marked increase in value from when it was first mortgaged, refinancing could provide a lump sum of money to pay off higher-interest debts. In refinancing, it pays to think time as well as money. If it costs $2,000 to refinance a home and you save $100 a month in mortgage payments, it will take 20 months to start seeing any real savings. However, if your plans are to stay in the home for several more years, it would be worth the wait to see the savings.

Follow steps 1-9 below to find how long it will take to recoup your costs of refinancing.

1. Current mortgage balance ____________

2. Estimate closing costs multiply line 1 by .035 ____________

3. Add line 1 and line 2 estimate new loan amount ____________

4. Enter present monthly payment ____________

5. Calculate new payment ____________
(see instructions at bottom of table below)

6. Subtract line 5 from line 4 ____________

7A. Years you will keep home ____________

7B. Convert to months (x12) ____________

8. Multiply line 6 by line 7B ____________

9. Divide line 2 by line 6 to calculate time to recoup costs. _____________


1) To calculate monthly payment, divide loan amount by $1,000.
2) Then multiply by payment factor for corresponding interest rate.

Interest Rate		30-Year Term		15-Year Term
6.00% 6.25%		5.995 6.157		8.443 8.574
6.50% 6.75%		6.321 6.486		8.711 8.849
7.00% 7.25%		6.653 6.822		8.988 9.129
7.50% 7.75%		6.992 7.164		9.270 9.412
8.00% 8.25%		7.338 7.513		9.557 9.701
8.50% 8.75%		7.689 7.867		9.847 9.994
9.00%		8.046		10.143

BLUE KNIGHT FUNDING YOUR CHRISTIAN MORTGAGE COMPANY

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