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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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    Muncie, Indiana - February 27, 2015 – MutualFirst...

    Monday, March 2, 2015

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Proactive Steps to Take in Light of Anthem Data Breach

Chances are you are a person who has Anthem insurance coverage or you know someone who does. As a result, either you or your friend has a reason to be concerned.

A typical data breach includes a compromise of debit card numbers or partial personal identifying information. This kind of breach, though inconvenient, can typically be ‘fixed’. An initial investigation indicates that the Anthem breach includes a compromise of name, birthday and/or social security number. This kind of information is all one needs to steal someone’s identity.

According to Anthem this particular breach could affect up to 80 million people. Instead of trying to ignore this has happened or just being upset, it’s now time for you to be educated and try to protect yourself as best as you can. We have some tips that will help you accomplish that.


1. Review Your Statements


First, take a moment each month to view your eStatement or monthly statement. You can monitor your accounts throughout the month with Online Banking and the MutualBank App. Monitoring your accounts will give you the quickest opportunity to see if your accounts have been compromised. If you notice any transactions that are unfamiliar or questionable, please get in touch with your MutualBanker. Call us at 800-382-8031.


2. Be Cautious with Any Anthem Emails You Receive


Next, if you receive an email stating it is from Anthem, be cautious. Anthem’s website warns customers not to reply with information, click any links or open any attachments within the email. Anthem is not calling their customers and will not ask for information. Never give your credit card information, social security number, or other sensitive information to someone via email or over the phone.


3. Consider Freezing Your Credit


If you are a resident in Indiana, the Attorney General’s office website (http://www.in.gov/attorneygeneral/2853.htm) is offering and encouraging you to sign up for a free credit freeze with each of the three credit bureaus. A credit freeze places a hold on your credit where a new line of credit could not be obtained without you unfreezing your credit. This doesn’t affect already open credit lines like an existing credit card, yet helps to protect you against someone opening new lines of credit in your name.


4. Keep in the Know


Finally, try to keep in the loop on the Anthem Breach. The best source for current information about this breach can be found at Anthem’s Frequently Asked Questions. (http://www.anthemfacts.com/faq)

MutualBank is here to help inform you of ways to help protect against identity theft. Thank you for trusting us.

Sunday, February 15, 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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