A lower interest rate often means a lower monthly payment if the terms of the refinanced mortgage are the same as the original mortgage. Depending on your credit rating, 30-year mortgage rates have been between 3.5% and 4% for several weeks. While not the lowest we’ve seen, mortgage rates are still well below the 6% level from five years ago.
For example, if you purchased a home five years ago, and your current loan payoff is $200,000 at a fixed rate of 6%, your monthly payment is around $1,288, before property taxes and insurance. If you were able to refinance that mortgage at 3.5% over 30 years, it should lower your monthly payment to $898.09. Thus, you decrease your cash outflow by more than $4,600 each year.
If you are able to refinance, you should consider applying the savings to your retirement account. Let’s do a little more math. In our previous example, refinancing at a lower rate saved you approximately $390 a month. Let’s assume you invest $390 every month for 25 years. Assuming a conservative, annualized stock market return of 8.5%, through compounded interest and diligent investing, you should have a nest egg of approximately $403,060 in 25 years. You could pay off the approximately $50,000 left on your now five-year mortgage, and have about $350,000 left in your saving account.
While this is a hypothetical scenario, the point is that by refinancing your mortgage, you can take control of how your money works for you. If you have questions regarding your mortgage, the experts at Henssler Financial will be glad to help.
If you have questions, contact the Experts at Henssler Financial: experts@henssler.com or 770-429-9166.
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Disclosures
The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
