When refinancing a mortgage to lower your monthly payments1, it is important to understand what determines the terms and amount of both. Typically, monthly mortgage payments consist of four parts: principal, interest, taxes and insurance. You may be most familiar with the interest – the percentage of the loan amount that you’re changed for borrowing money. Your interest rate is based on market conditions, your credit score, down payment and mortgage type, and a decrease of at least 1% in the rate is typically required to be cost effective when compared to the lower monthly payment.
But there are other factors that play a role as well, including:
For more on ways to lower your monthly payment and whether it’s a good choice for you, contact our loan consultants at (800) 451-1895 to find out which options you may qualify for and how to make them work.
1 By refinancing your existing loan, your total finance charge may be higher over the life of the loan.