Put very simply, the decision to refinance a home should be based on whether you will own the property long enough to recapture the expense connected with the new loan.  The way to figure this can be as easy as subtracting the proposed new house payment from the existing payment to find out what the monthly savings will be.  Then, divide the monthly savings into the cost of refinancing to determine how many months it will take to recapture that cost.

There are some situations in which a refinancing decision should invariably be made.  If you are able to negotiate a “no-cost” mortgage (you pay no points or closing costs) and if the new mortgage rate is lower than your existing rate, then refinancing your loan may be of financial benefit to you.  If the remaining mortgage balance, including points and closing costs, can be refinanced at a reduced monthly payment and still be paid off within your existing mortgage payment term, then refinancing would be advisable.  Lastly, you can generally count on it being time to refinance when your new mortgage rate is at least one to two points lower than your existing rate and you plan to stay in your home for at least three to five years.  

Contact a Home Loan Specialist at 1-888-562-6200 to see if refinancing is right for you. Or go to our website www.churchillmortgage.com and fill in the Refinance Application and a Home Loan Specialist will contact you about your specific situation.