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  • The big question we are going to answer in this article is: “How can you work out if a mortgage refinance makes sense for you?” In the previous article of this series we compared refinancing a mortgage with changing your cell phone provider. Just as with a cell phone contract, there are many factors that make a good mortgage.
    The key to deciding if a mortgage refinance is all about the numbers. So get your calculator, or better still, go to an online refinance calculator and lets starting crunching numbers.
    Let’s start with the information you need from your current mortgage. The first number you need is your current monthly payment. You can find that in your last mortgage statement. You also need the balance left on your current mortgage. That should also be on your mortgage statement. If it isn’t check your account online or write to your lender and ask for a balance statement. Also, check how many years you have left to pay off your mortgage and your current interest rate.
    So by now you should have:
    – Your current monthly payments
    – Your current mortgage balance
    – Numbers of years left on your current loan
    – Your current interest rate
    – Prepayment penalties
    To decide if refinancing is a good idea for you, you need to have mortgage refinances to compare your current loan with. So go shopping for the best refinance terms you can find (Zillow and Bankrate are great websites to get started). Once you have found a few candidates for your next refinance write down this information.
    – New refinance loan interest rate
    – New loan term (that is the number of years the mortgage will last for)
    – Closing costs
    Getting your lender to give you a straight answer on your closing costs can sometimes be tricky. Closing costs include your application fee, attorney’s fee, title search, appraisal fee, local taxes and transfer fees, credit check fee, inspections, document preparation fee, your lender’s attorney fee and any points you pay toward lowering your refinance loan’s interest rate.
    Now we have the raw data, let’s learn how to use it in our decision making.

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