Are you considering refinancing into a mortgage with a lower interest rate because it will reduce your monthly payment by $100 or more? You may save thousands or even tens of thousands of dollars over the life of the loan.
However, you need to do this one exercise before you refinance: You need to factor in how many payments are left on your current home loan. If you don’t, a new loan with a lower interest rate might actually cost you more.
To double-check if you’ll actually save money, total your payments left on your current mortgage, then compare this against your new total payments. Keep in mind that this comparison assumes you’ll stay in a home for 30 years. For those who plan to stay in their homes, this is an important calculation and one many people forget.