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$740$ or higher and usually at least $20\%$ equity.

MORTGAGE REFINANCING WORKSHEET

STEP $1.$ Current monthly mortgage payment.

STEP $2.$ New monthly mortgage payment if you refinance

New rate

Current mortgage balance

$,$ # of $1,000$s to borrow

STEP $3.$ Monthly savings.

Step $1.$

STEP $4.$ Total refinance closing costs $($appraisal$,$ title search, etc.$)$

STEP $5.$ Total months needed to recoup your costs.

Step $4$ result $$ Step $3$ result

STEP $6.$ Total months you plan to live in your home

The Bottom Line$-$If you plan to live in your home longer than the result

in Step $5,$ it makes sense to refinance. According to money.CNN$.$com, with mortgage rates near $35-$year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of $740$ or higher and usually at least $20\%$ equity.

Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs.

Your current mortgage payment is $$1,678\mathrm{.}50$ per month, with a balance of $$218,800.$ Suppose you have a chance to refinance at a certain bank with a $30-$year, $5\mathrm{.}5\%$ mortgage. The closing costs of the loan are application fee, $$80$; credit report, $$165$; title insurance, $0\mathrm{.}4\%$ of the amount financed; title search, $$360$; and attorney's fees, $$560.$

You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage.

hat is your currently monthly mortgage $($in $$)?$

$

$($b$)$

Using this table, what is your new monthly mortgage payment $($in $$)$ if you decide to refinance? $($Round your answer to the nearest cent.$)$

$

$($c$)$

What is your monthly savings $($in $$)$ if you decide to refinance? $($Round your answer to the nearest cent.$)$

$

$($d$)$

Calculate the total refinance closing cost $($in $$).($Round your answer to the nearest cent.$)$

$

$($e$)$

How many months would you need to recoup the refinance closing cost? $($Round your answer up to the nearest month.$)$

months

$($e$)$

How many months are you planning to live in your home?

months

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