Running the Numbers on Refinancing
May 3, 2022
Deciding whether or not to refinance an existing mortgage typically means running some numbers. You can do this on your own, but it’s helpful to get the professional assistance of a loan officer. It mostly boils down to how much you’ll save each month, but there are other considerations.
First, the change in rate isn’t everything. Old school rules say that it’s a good idea to refinance if current market rates are 1% or 2% lower than what you currently have, but the rate is only a part of it. The other component is the amount being financed. For larger loan amounts, a reduction of only 0.5% might make sense. For smaller loan amounts, 2% may not be enough.
Instead, calculate the monthly savings and then divide that amount into the closing costs associated with the mortgage. The result is how many months it will take to ‘recover’ the closing costs in the form of monthly savings. Pay less attention to the actual rate but instead how long it will take to get your closing costs back.
Take a loan amount of $300,000 over 30 years with a rate of 4.50%. The principal and interest payment works out to $1,520 per month. If current market rates are at 3.5%, the new payment would be $1,347 for a savings of $173 per month. If closing costs were $3,000, then it would take just over 17 months to recover the associated fees. Not bad. If the loan amount were $100,000 under the same scenario, the monthly savings would be $57 and recovered in 52 months, or more than four years. Probably not a good idea in that situation.
There are other considerations outside of month-to-month savings. Let’s say you’re less concerned about lowering your monthly payments, and you’re more interested in paying off your house faster. In this scenario, it may make sense to refinance at an even lower interest rate on a 15-year mortgage. You’ll pay more per month, but you can potentially save tens of thousands of dollars over the life of your loan.
If you’re wondering whether a refi makes sense for you, reach out! I’ll be happy to answer any questions and can refer you to a mortgage professional when you’re ready to crunch some numbers.
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Modern living room full of high-end features that add value to your home Regarding home improvement, thinking about features that add value to your home is a smart move. Adding certain elements can make a big difference, whether you're sprucing up your place in Massachusetts or anywhere else. That isn't just about giving your house a fresh look; it's about making choices that will pay off in the long run . From energy-saving upgrades to creating multifunctional spaces, there are plenty of ways to enhance your home's appeal and functionality. Here are some top features that can transform your living space into a more comfortable, efficient, and valuable property. Energy Efficiency and Sustainability Maintaining an eco-friendly living space is not just a passing trend; it's a necessity. Here is where solar panels and other renewable energy sources are paramount. They are not just good for the environment; they significantly reduce electricity bills over time. 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Incorporating plants can improve air quality and add a tranquil, natural element to your space. These elements work together to create a home environment that supports health and wellness, making it a sanctuary of comfort and care. Futureproof Your Home As we've seen, numerous features add value to your home, each playing a vital role in future-proofing your living space. From energy efficiency to smart technology and sustainable materials to adaptable designs, these elements are essential in creating a comfortable home that is valuable and sought-after. So whether you're in Massachusetts or reading this from a different country, consider these features and seek builders who will make your construction dreams come true, ensuring your home is ready for whatever the future holds. Meta: Discover how features that add value to your home can transform your living space into a future-ready sanctuary, boosting comfort and value. KW: Features that Add Value to Your Home
When you initially launched your home-based business, you never anticipated that it would grow so impressively. Yet today, your home can no longer comfortably accommodate your business needs. If you require more space for your inventory, equipment, and business functions, Dream Builderz can execute your home addition! And if you’re curious about upsizing to a larger home to support continuous business growth, here’s how to obtain LLC status in a different state, master new entrepreneurial skills through online education, and find the perfect property to accommodate your business. Register for LLC Status Before moving to a new home, make sure to register for LLC status in the area where you’re relocating to. By securing limited liability and tax breaks for your business, you’ll gain a sense of financial stability, especially as you deal with moving costs. You don’t need to budget for a lawyer to complete this task, either. If you have time, consider filing on your own, or turn to an online formation service for affordable, convenient support. If you’ll be moving to a new state, make sure to thoroughly research their rules for business formation. Build Your Business Through Education Your business is growing - but to save time, space, and money down the road, you’ll want to start focusing on addressing process inefficiencies, optimizing your inventory management strategy, and digitizing workflows and documents when possible. You can learn to do all of this and more by earning your business degree online. This is a fantastic way to enhance your management skills, as well as your expertise in communications, accounting, and more. Here’s a good option for online coursework, which will allow you to keep up with your entrepreneurial responsibilities, tackle the moving process, and study simultaneously. Determine What You Need Prior to touring any homes, think about exactly how much room you need to properly run your business . To calculate your square footage requirements, Twin Cities Habitat for Humanity recommends assessing your current home’s square footage and even measuring the dimensions of specific rooms so that you can figure out the amount of extra space you need. Find Your Ideal Community You may want to stay in your current neighborhood, but if you work from home, you can also expand your property search to other communities. However, not every city or town will be right for you as an entrepreneur. Rumie recommends looking for an area with plenty to do, access to high-speed Internet services, and other residents who share your hobbies and interests. Work With an Agent A great real estate agent can support you throughout the home-buying process and help you make an attractive offer, leaving you with more free time to work on your business! Ask other entrepreneurs you know who have moved recently if they have any recommendations for agents. Make sure to explain the features you need as a business owner so that the agent understands your unique specifications, like a room that could be used as a home office. Stay Productive While Moving For entrepreneurs, moving can be especially chaotic - keeping up with your workload while relocating is tough. Hire movers so that you can minimize your to-do list and get your clients, customers, vendors, and employees up to speed on your moving plans ahead of time so that you can prepare appropriately for potential disruptions. If you’ve reached a point where you need to upsize for business growth, your entrepreneurial future is bright! Upsizing gives you the opportunity to move into a property with all the space you need for your company. With these tips, you can also update your LLC status in a different state and advance your business knowledge through an online degree program. Ready to renovate your new home with all of the features you need? Dream Builderz is here to help! Visit our website today to reach out and get a project quote. Photo via Pexels
