corriere.it
Mortgage Refinancing: Is it Convenient?
This article discusses the convenience of mortgage refinancing, considering different scenarios and factors, such as fixed vs. variable rates, loan term, and interest rate changes.
Italian
Italy
Labour MarketInterest RatesFinanceMortgageLoansRefinancing
Gino PagliucaEnrico Marro
- When is refinancing a fixed-rate mortgage convenient?
- A fixed-rate mortgage refinance is convenient if the monthly payment is reduced by at least 50 euros with the same loan amount and remaining term.
- What is the effect of extending the loan term on the monthly payment?
- Extending the loan term reduces the monthly payment. For example, extending a 19-year loan to 25 years while reducing the interest rate from 4% to 3.2% would lower the monthly payment from 909 euros to 659 euros.
- Why might a bank be hesitant to approve a mortgage refinance request?
- Banks may be hesitant to approve refinancing requests if the applicant has a history of multiple refinancings, as this increases their costs. The bank assesses the applicant's creditworthiness to ensure the long-term viability of the loan.
- What are the key factors to consider when deciding whether or not to refinance a mortgage?
- Whether or not refinancing is worthwhile depends on multiple factors, including the amount of savings on monthly payments, the remaining loan term, the interest rate offered, and the applicant's financial situation and history.
- How does refinancing a variable-rate mortgage differ from refinancing a fixed-rate mortgage?
- Refinancing a variable-rate mortgage to a fixed-rate mortgage is more complex and requires simulating the impact of interest rate changes on the amortization schedule. It generally makes sense if the initial rate of the variable-rate mortgage is higher than the fixed rate offered for refinancing.