Before Refinancing

Before you consider refinancing your existing mortgage, it's important for you to determine the break-even point, which represents how soon the cost of the refinance will be recaptured through lower monthly payments.

The answer to this question depends on multiple factors which include:

  • Current interest rate
  • New potential rate
  • Closing costs
  • How long you plan to stay in your home

But while the break-even point is easy enough to calculate, other factors may also influence your decision and, if it's a go, the type of loan you'll select.

While there is no rule of thumb for the maximum payback period (break-even point) that makes sense for most borrowers, three years or fewer typically is considered reasonable if you intend to keep your mortgage at least that long.

If you can get a true zero-cost refinance, your break-even point will occur immediately.

In that case, it may make sense to refinance your mortgage even if your interest rate is lowered by just an eighth of a percentage point because you'll save money every month, though the amount may be small.

A true no-cost refinance means you pay no money upfront and neither your loan amount nor your interest rate is increased to build any cost into your new loan.

As your mortgage advisor, we can help you sort through the confusion by providing you with a quick and easy break-even analysis to determine its refinancing is a sound financial decision.

For more information call us today!

For Vancouver Mortgage Broker related inquiries ~ 604 628 5040.

For Vancouver Luxury Realtor related inquiries ~ 604 566 8968.

Cheers,

Jessi Johnson Vancouver Mortgage Broker Vancouver Luxury Realtor

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