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Should You Refinance Your Home Mortgage?

Should you refinance your home mortgage?

Housing costs are one of the largest components of most household budgets. With interest rates changing so frequently, you should periodically determine whether refinancing at current interest rates would save you money.

To determine whether you should consider refinancing you need to compare the costs of obtaining a new mortgage with the savings you will enjoy with a reduced interest rate. You my also want to consider refinancing to a different type of mortgage, such as switching from a 5 year balloon to a 15 year fixed rate mortgage.

Here is an example and a worksheet that will help you determine if refinancing makes sense for you. You may want to print this article and use the worksheets. Rick and Carol have a home they bought 3 years ago for $300,000 and they have 5 years remaining on balloon mortgage of $200,000 with an interest rate of 6.25%. Their monthly payments are $1231.43. They intend to live in their home for several years and would like to lock in a 30-year mortgage with a 4.375% fixed rate.

 

Rick and Carol's Example

New Mortgage Costs

Discount points (in $)

$ -

Origination points (if any)

$ 1500

Application fee

$ 475

Credit check fee

$ -

Attorney fees (yours)

$ -

Attorney fees (lender's)

$ -

Title search fee

$ -

Title insurance fee

$ -

Appraisal fee

$ -

Inspections

$ -

Local fees (taxes, transfers)

$ -

Other fees

$ 360

Total cost of new mortgage

$ 2335

 

Calculating the Savings

Monthly payment on current mortgage

$1231.43

Monthly payment on new mortgage

$998.57

Difference between two mortgage payments

$232.86

Divide total fees on new mortgage by monthly savings - This is the number of months to recover your costs.

10 months

 

In this example, Rick and Carol would save almost $2800 annually in mortgage payments and lock in a 30 year fixed rate mortgage. Over the course of the mortgage they would pay about $83,000 less in total interest.

Worksheets for you to use

New Mortgage Costs

Discount points (in $)

$

Origination points (if any)

$

Application fee

$

Credit check fee

$

Attorney fees (yours)

$

Attorney fees (lender's)

$

Title search fee

$

Title insurance fee

$

Appraisal fee

$

Inspections

$

Local fees (taxes, transfers)

$

Other fees

$

Total cost of new mortgage

$

 

Calculating Your Savings

Monthly payment on current mortgage

$

Monthly payment on new mortgage

$

Difference between two mortgage payments

$

Divide total fees on new mortgage by monthly savings - This is the number of months to recover your costs.

 

 

Check out our mortgage refinancing calculators found in the Education Center that can make the calculation easier. 

Other considerations
When reviewing the feasibility of refinancing, you may also wish to consider refinancing a larger or smaller amount than the current balance of your mortgage. If you have excess funds available and believe you will have a hard time earning a return greater than the mortgage rate, you may want to pay down your mortgage and get a new mortgage that is smaller. If you have other liquidity needs, you may want to refinance a larger amount to free up some of the equity in your home.

Remember that mortgage interest is tax deductible if you itemize your deductions on your tax return. Consult your tax advisor to see how this may apply to your situation.

Final thoughts
No interest rate environment lasts forever. Unfortunately there is no crystal ball that will tell you when rates have reached their lowest level. Taking action now to evaluate whether refinancing now makes economic sense, and evaluating the type of mortgage you want can help you be in control of one of your largest household expenses. 

We at MutualBank are here to help you each step of the way. Call your MutualBanker at 800-382-8031 to start finding the right solution for you. Go ahead...live a better life!

Apply Online 

Check Rates

Contact a Representative Today

Back to Education Resources

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Personal Social Media Account Security

For many of us, social media has become a part of our everyday lives and helps us conveniently keep tabs on the people and topics we care most about.

Recently however, there has been an increase of social media account take overs by cybercriminals. As stated in the media, one contributing factor in some of the social media account takeovers has been the use of weak passwords.


Tips for creating a stronger password:


  • Passwords should typically:
    • be at least 8 characters in length
    • contain at least 1 number
    • contain at least 1 special character (!@#$$%)
    • contain both upper and lower case characters.
  • Do not use your name, date of birth, maiden name, mother’s maiden name, address, or other easily guessable words for passwords. 
  • Another way to create a strong password is to use a series of words that do not relate to each other. For example, JumpingFastRelaxStop!#.

 


Social media additional security options:


Another way to help avoid social media account takeover is to use the additional security options available. Two-factor authentication adds an extra layer of security that drastically decreases your chances of account takeover. Two-factor authentication is essentially the using of two separate components to verify your identity, the combination of something you HAVE with something you KNOW. A good example of two-factor authentication you most likely are already used to is withdrawing cash from an ATM, for example. Having both your debit card AND knowing a pin number is required to complete the withdrawal and protect your identity.

A popular and convenient two-factor authentication method is using a combination of both an online password and a text message verification sent to your phone. Enabling this type of authentication typically follows this process:

  1. Enter your password into Facebook or another website
  2. Immediately receive a text on your phone with a temporary pass key
  3. Enter the passkey received back on the site/app and you’re logged in

This may seem like overkill, but enabling this two-factor authentication will drastically decrease the chances of your social accounts being hacked. And actually, the process of setting up and using this authentication is pretty simple and convenient.

 


How to enable two-factor authentication:


Many popular social networks like Facebook, Twitter, LinkedIN, and others already support two-factor authentication. To learn more about how to do so on the most popular sites on the web, be sure to check out this article:

http://socialcustomer.com/2014/04/how-to-enable-two-factor-authentication-on-50-top-websites-including-facebook-twitter-and-others.html

Wednesday, April 22, 2015

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Should You Refinance Your Home Mortgage?

Should you refinance your home mortgage?

Housing costs are one of the largest components of most household budgets. With interest rates changing so frequently, you should periodically determine whether refinancing at current interest rates would save you money.

To determine whether you should consider refinancing you need to compare the costs of obtaining a new mortgage with the savings you will enjoy with a reduced interest rate. You my also want to consider refinancing to a different type of mortgage, such as switching from a 5 year balloon to a 15 year fixed rate mortgage.

Here is an example and a worksheet that will help you determine if refinancing makes sense for you. You may want to print this article and use the worksheets. Rick and Carol have a home they bought 3 years ago for $300,000 and they have 5 years remaining on balloon mortgage of $200,000 with an interest rate of 6.25%. Their monthly payments are $1231.43. They intend to live in their home for several years and would like to lock in a 30-year mortgage with a 4.375% fixed rate.

 

Rick and Carol's Example

New Mortgage Costs

Discount points (in $)

$ -

Origination points (if any)

$ 1500

Application fee

$ 475

Credit check fee

$ -

Attorney fees (yours)

$ -

Attorney fees (lender's)

$ -

Title search fee

$ -

Title insurance fee

$ -

Appraisal fee

$ -

Inspections

$ -

Local fees (taxes, transfers)

$ -

Other fees

$ 360

Total cost of new mortgage

$ 2335

 

Calculating the Savings

Monthly payment on current mortgage

$1231.43

Monthly payment on new mortgage

$998.57

Difference between two mortgage payments

$232.86

Divide total fees on new mortgage by monthly savings - This is the number of months to recover your costs.

10 months

 

In this example, Rick and Carol would save almost $2800 annually in mortgage payments and lock in a 30 year fixed rate mortgage. Over the course of the mortgage they would pay about $83,000 less in total interest.

Worksheets for you to use

New Mortgage Costs

Discount points (in $)

$

Origination points (if any)

$

Application fee

$

Credit check fee

$

Attorney fees (yours)

$

Attorney fees (lender's)

$

Title search fee

$

Title insurance fee

$

Appraisal fee

$

Inspections

$

Local fees (taxes, transfers)

$

Other fees

$

Total cost of new mortgage

$

 

Calculating Your Savings

Monthly payment on current mortgage

$

Monthly payment on new mortgage

$

Difference between two mortgage payments

$

Divide total fees on new mortgage by monthly savings - This is the number of months to recover your costs.

 

 

Check out our mortgage refinancing calculators found in the Education Center that can make the calculation easier. 

Other considerations
When reviewing the feasibility of refinancing, you may also wish to consider refinancing a larger or smaller amount than the current balance of your mortgage. If you have excess funds available and believe you will have a hard time earning a return greater than the mortgage rate, you may want to pay down your mortgage and get a new mortgage that is smaller. If you have other liquidity needs, you may want to refinance a larger amount to free up some of the equity in your home.

Remember that mortgage interest is tax deductible if you itemize your deductions on your tax return. Consult your tax advisor to see how this may apply to your situation.

Final thoughts
No interest rate environment lasts forever. Unfortunately there is no crystal ball that will tell you when rates have reached their lowest level. Taking action now to evaluate whether refinancing now makes economic sense, and evaluating the type of mortgage you want can help you be in control of one of your largest household expenses. 

We at MutualBank are here to help you each step of the way. Call your MutualBanker at 800-382-8031 to start finding the right solution for you. Go ahead...live a better life!

Apply Online 

Check Rates

Contact a Representative Today

Back to Education Resources

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