posted on 26 Aug 2014 01:43 by earlyfinances9290
Citigroup (NYSE: C) reported Monday that its income inside of first quarter fell 32 percent on lower consumer loans decrease revenue from investment consumer banking.
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Example 1: Borrower currently has a $210,000 loan at g.25% interest rate... The borrower's current monthly principal and interest approximately $1,432 each... Let's say that we are looking refinance this borrower to five.25%... The new amount of the loan will be $216,000 (with closing costs rolled in)... This makes his new monthly principal and interest payment at $1,192 30 days... This is monthly savings of $240 30 days... Dividing $6,000 (total closing costs) by $240 (total monthly savings), we become 25 months... This means that in 25 months (2 years and 1 month), this borrower would break even in this particular loan... Possibly month more than 25 months, he stays in the house, additional he helps you to save... If he doesn't intending on staying there for 2 years, he probably shouldn't refinance his loan...
How is the break even point decided on? It's fairly easy... Basically, you take all for this closing costs involved in refinancing and divide it by volume of money that you intend on saving each month from re-financing... This will give you' break even point calculated into many... When you are doing this, make certain you are basically using the closing costs and not counting any pre-paid items (fees collected to setup your escrow account fork out for your property taxes and homeowner's insurance)... You end up being paying these on either loan and when you already have got an escrow account, need to know get reimbursed from your existing full details on the story whenever they receive a payoff using the closing of this new mortgage which would offset the actual pre-paid gear...
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