Refinance or not?

“Talking Someone Out of Refinancing”

Mom and dad suggested they get a second opinion, so Jess called and set up an appointment to discuss a possible refinance. I did her parents mortgage a couple of years ago.

She told me that she was contacted by the bank that was presently servicing her mortgage. They offered to reduce her current rate from 5% to 4.375% with $2000 out of pocket. The monthly saving was going to be $69 per month.

Now let me ask the most important question, how much longer are you planning on living in your condo? She told me she was planning on getting married in two years and then they would be buying a single family home together.

OK, Jess here is the math, a savings of $69 per month would take 29 months to recoup your investment. The other thing, you have already paid your mortgage for 4 years, you would be starting over, going back to 30 years. You are paying down more principal now compared to a new 30 year mortgage.

Jess was just not a good candidate for a refinance. Unfortunately, many are being talked into a refinance without really understanding the bigger picture.

image courtesy of David Castillo Dominici/freedigitalphotos.net

Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294
Email: joe@righttracfg.com
www.righttracfg.com
www.joepetrowsky.com

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