Now that interest rates are as low as they’ve ever been, mortgage refinancing is extremely popular.  But it’s also a confusing process.  Do you know how to figure out when refinancing makes sense?  What are the right rules to follow when refinancing your mortgage? 

In this episode of the Finance For Physicians Podcast, Daniel Wrenne talks about how physicians can capitalize on record-low mortgage rates. Compare and analyze all mortgage options that incorporate closing costs and other complexities. The decision to refinance is not so clear-cut and straightforward.   

Topics Discussed:

Why refinance? New loan costs + closing costs > existing loan costs

What? Find and set up a new mortgage to pay off old, existing mortgage

How? Depends on the specifics of the deal

What drives mortgage interest rates? Market or economic factors:

10-year treasury rate

Supply and demand

Credit score

Percentage of home equity

Debt-to-income ratios

Loan payoff term

Loan size

What is the true cost of the loan? Add closing costs, interest and sometimes PMI

Break-Even Point: When interest rate savings equal closing costs

Long-term Costs: What’s the cross-benefit of keeping and paying fees?

Amortization Schedule: Run numbers using calculator for current/potential loan

Other Considerations: Compare rates, different lenders, and loan estimates

Links:

Historical 30-Year Mortgage Rates

Mortgage Amortization Calculator

Credit checks shouldn’t hurt you (within 45 days)

Loan Estimate Explainer

How Physician Loans Work

Finance For Physicians