Example of Refinancing
The interest rate on your mortgage depends on your monthly payments.
Example #1
Loan: $250,000
Duration: 30 years
Rate: fixed
Payments: principal plus interest
If the interest rate is 6%, the monthly payments are: $1,498.
If the interest rate is 5,5%, the monthly payments are: $1,420.
Savings per month: $78
Savings per year: $936
Lowering the interest rate
First, let's clarify what the interest rate is: It's simply the amount that you are charged by bank or other institution for using the money. Let's say you take out a $300,000 loan, and the bank or other lender charges you 5% interest yearly on that loan. In this case you will have to pay $15,000 for the loan during your first year. This payment will change with your principal and balance, so you have to calculate all expenses long-term.Example #1
Loan: $250,000
Duration: 30 years
Rate: fixed
Payments: principal plus interest
If the interest rate is 6%, the monthly payments are: $1,498.
If the interest rate is 5,5%, the monthly payments are: $1,420.
Savings per month: $78
Savings per year: $936
