With current mortgage rates at their lowest levels in decades you may be thinking about refinancing your mortgage. Unfortunately, many people simply pay their monthly mortgage bill without exploring how easy it could be to have a lower payment or possibly shortening the term of their mortgage.

Most home owners refinance to save money month-to-month, but unless you do the math before you trade in one mortgage loan for another you could be wasting both time and money. What you truly save is based on how much the new loan costs and how long you will be in the home.

When considering refinancing your home you will need to take into account all the costs associated with the refinancing, including points, loan origination fees, appraisal, attorney costs, insurance, inspections, private mortgage insurance, recording fees, survey, title insurance, underwriting fees and other costs. These out of pockets should be compared to your monthly payment savings based on the new interest rate of your loan. For example, if you will save $50 a month over your old mortgage and the new refinanced mortgage costs you $2,500 it would take you just over four years or 50 months to break even and start enjoying that savings. If you plan to move within the next few years then refinancing may not be the best option. On the other hand, if you plan on being in your home for many years to come you may want to consider refinancing into a 15 or 20 year mortgage. The interest rates on these shorter term loans are generally lower and you could save thousands of dollars in interest. Remember though, your payment may increase. In that case, make sure you evaluate your current and expected financial situation to determine whether or not you can handle the higher payment. One last consideration, if you don't plan on moving anytime soon, consider paying points (additional fees) to buy down or reduce the interest rate on your loan to make your monthly payments even lower. A Gateway home expert can discuss all of these options with you along with providing a detailed written analysis of the costs and benefits of each of your refinance options.

Also, if you have an adjustable rate mortgage loan, known as an ARM, and you are thinking about a refinance, make sure you know when your rate is scheduled to adjust.  If your ARM is not set to adjust for several years, it is a good idea to refinance and lock in today's low rate with a fixed rate mortgage. If you have a fixed-rate mortgage, examine how your mortgage's interest rate compares to current interest rates.  If the rate you are paying is higher by more than .5%, you could benefit from a refinance.

Find out when you will see real savings from a refinance! Call a Gateway loan expert and let us show you how we can potentially save you thousands on your mortgage payments.   (877) 406-8109

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