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DON'T REFINANCE YOUR HOME - ALMOST NEVER ANYWAY

By
Real Estate Agent with The Evans Group DMV - Serving Virginia VA DPOR 0225103518

Before considering refinancing your home, consider the true cost of pulling the equity out of your home.  I have often counseled my clients by telling them to never refinance your home but instead look at alternate options for obtaining funds.

For example you have owned your $200,000 home for four years (original value $230,000) and have $50,000 equity in your home, your current interest rate is 4.5%.  Your current home's value is $250,000

Currently you have paid $34,819 in interest, $13,823 in principal leaving a balance of $186,823 on your mortgage with a September 2038 with a monthly loan payment of $1,013.37. 

If you refinance your home pulling out $50,000 from your $250,000 will cost you…

Loan amount: $250,000

Term: 30 years

Payment at 4.5%: $1,266.71

Cost of two points $5,000

Payment at 4%: $1,193.54

Monthly savings: $83.33

Break-even point: 60 months ($5,000 divided by $83.33)

 Your new loan payment $1,193.54 (Not a lot, correct?)

WRONG!!!

Your total costs of refinancing.

Interest already paid - $34,819.10

2 Points - $5,000

Future Interest - $179,673.77

---------------------------------------------

Total Interest Paid - $219,492.87 after 30 years of loyal payments.

 

Yep you got it --- you gave away nearly $40,000.

Simple rule DON'T REFINANCE YOUR HOME... CALL ME AND I WILL PUT YOU ON THE RIGHT PATH TO SAVING YOUR MONEY. 

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