Time to Refinance?

Factors Impacting Your Break-Even Point

Several costs can impact your break-even point, including:

• Application and Origination Fees: Costs for processing your loan.
• Appraisal Fees: The cost of assessing your home's current value.
• Title and Insurance Fees: Includes title search, title insurance, and other required reports.
• Prepaid Interest: Covers interest from the closing date to the end of the first month.

Property taxes and homeowners insurance may also need to be paid upfront at closing, contributing to the total closing costs. The more you save in interest each month, the quicker you’ll reach your break-even point.

Shorter Loan Terms Lead to Faster Savings

Choosing a shorter loan term, like refinancing from a 30-year to a 15-year mortgage, can help you reach your break-even point faster. Shorter terms typically come with lower interest rates, which means you’ll pay off the refinance costs sooner and less in interest over the life of the loan. However, it’s important not to extend the term of your mortgage when refinancing, as doing so could result in paying more interest over time.

How Long Will You Stay in the Home?

Another critical consideration is your future plans. You may not benefit from refinancing if you plan to sell the home in a few years. Use the break-even point calculation to determine if it aligns with your timeline. If you break even after 24 months but intend to sell the home in 18 months, there may be better choices than refinancing.

Refinancing can be smart when interest rates drop, but it’s essential to calculate your break-even point and consider your long-term plans. Whether you’re reducing monthly payments or aligning with your future goals, these steps can help you make a wise decision for your financial well-being.

Movement Mortgage: A Christian Mortgage Option

On Today’s Program, Rob Answers Listener Questions:

• I've got a mutual fund called a capital appreciation fund that uses both stocks and dividends. Can I use the dividends to get into more cash than I am in the stock and be safe?
• I have my finances set up in a trust. Within that trust investment setup, I have a Roth IRA and a traditional IRA. My parents have passed away, and I've gotten a portion of the inheritance, with more yet to come. Do I need both the Roth IRA and traditional IRA, or should I eliminate one of them?
• I'm self-employed, and my wife doesn't work, so I'm ensuring I do a good job saving for retirement. I'm almost 40 years old, and I have a Roth IRA. There are some years when I have more to set aside than what my Roth IRA can accept. What is my second choice after the Roth IRA for those years when I have additional funds to save for retirement?
• My mom, sister, and I have our names on a home. What will happen when my mom passes away? My sister says we will automatically be able to divide her portion, but I wanted to check with you on that. I'm not sure how the home is titled—is it with the right of survivorship or joint tenants?

Resources Mentioned:

• Movement Mortgage
• Refinancing? Calculate Your Break-Even Point First! (Movement Mortgage Article)
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App