Refinancing your Mortgage Sucks...

...But it Works!

The following is a case study of a recent client who refinanced their mortgage through MortgageOpolis.

Case Study:

Clients purchased a home last year and currently has a mortgage of $150,000.00 at 5.90%, 5yr fixed term /15yr amortization and $650 bi-weekly payments.
We were able to obtain a lower rate of 4.39%, 4yr fixed term / 13yr - 8 month and by keeping the payment the same at $650... we were able to save the clients aprox. $22,000.00 worth of payments which included the pre payment penalty of $4400 and the closing costs of $1400... assuming the interest rate in 13 years, 8 months is 4.39% or greater.

More often than not, refinancing becomes a viable option when current interest rates are 1.5% or more below your existing interest rate. In the case study above, the clients also had another option to consider which would have reduced their bi-weekly payments by $40. A savings of $40 bi-weekly would amount to $4160 for the 4 year term. However, the outstanding balance on the new mortgage would be aprox. $2200 more than that of the existing mortgage. This would would net the clients a savings of $1940 over the next 4 years. Although both options offered a savings, the clients were comfortable with their current payment structure and chose to eliminate their mortgage sooner.

Another factor which makes refinancing favourable is debt consolidation. Large amounts of debt and payments can seem like an endless burden that never get paid off. Many consumer lending agencies will offer affordable payments, but, the result is basically the never never plan. Did you know? On average it will take a borrower 9 years to repay a credit card debt by just making the minimum payments? Astounding isn't it?

Having a qualified mortgage professional examine your situation, could save you thousands of dollars and help you pay off your mortgage sooner. In summary, if your mortgage interest rate is currently 5.79% or higher, or you have several consumer debts... it's time to refinance. MortgageOpolis offers clients no obligation proposals defining the best options for their clients.

- Dave Vrabic, MortgageOpolis