Erik: 

Homeowners, to refinance or not to refinance? That is the question. 

Randal:

Welcome back to "Stay Focused," Focus Real Estate's weekly video series. We're gonna try to make this a little bit more interesting and not too dry, but we're gonna talk about refinancing. It's a real good idea to do a couple things to determine whether it's right for you. First of all, look at your current mortgage. I'm gonna get you to look at a couple of numbers really quickly. Look at what your principle and interest payments are together. If you have a mortgage right now that you are escrowing insurance and taxes. 

Erik:

And taxes. 

Randal:

Remove your insurance and taxes, and every one of your statements will have that number on it for you. 

Erik:

Just the principle and interest. 

Randal:

So grab that, grab a spreadsheet real quick, put that number in there and multiply it by the number of payments that you have remaining on that mortgage. Put that in another column and see what are your combined obligations in that current mortgage? Now- 

Erik:

The total amount. 

Randal:

Now, look at the rate that you're getting from your mortgage broker or the rate that you think you're gonna get. 

Erik: 

There's a difference between interest rate and APR. They should be, your mortgage broker, we're not mortgage brokers, we can help you find a good mortgage broker but your mortgage broker should be quoting you a rate and an APR that's including the cost and fees that they're charging for you to get that mortgage. So that you're comparing apples to apples 

Randal:

Calculate, you can jump online, grab a mortgage calculator anywhere along the way, calculate out or just drop your numbers in. How much your principle that you're borrowing, what that new interest rate is and find out what your new payment is. Now, multiply that out. Look at those numbers and compare are those numbers. It's just math,. It's just simple math, but math that you should be aware of, right? So you might actually find that you've been paying on that mortgage that you have borrowed at 4% for six, seven years. You have already paid 

Erik:

A good portion of the interest is already paid off, so it may not be worth it. 

Randal:

It may not be worth worth it for you to refinance at that lower rate. Calculate those numbers out and see what works for you. Lastly, I know everybody's heard this. You wanna speed up the process of paying off that mortgage as always, nothing changes with math. It's always a really good idea to make an extra payment a year. If you can fit that in your budget and that payment you make a year doesn't need to your taxes and insurance. 

Erik: 

And there's no pre-penalty for most mortgages to do that. 

Randal:

Yeah, so think about adding that number to your mortgage payment a year. It will get you out of paying a ton of interest, speed up the payoff process and in the long run, get you to that, that payoff sooner. 

Erik:

If you have questions on should you refinance or not, give us a call, we can help you out. But until next time. Stay tuned. 

Randal and Erik:

Stay tuned. And stay focused. Keep doing your math. It's all just math.