Eric Feichthaler

Dear Mr. Feichthaler:

I am looking for ways to save money in the new year, and many of my friends suggest I refinance my house. I am concerned the costs of the refinance will make this a bad idea. I have lived here with my husband for about 10 years, and we don’t intend to move anytime in the near future. Our current mortgage balance is about $230,000 and at 5% interest. 

— Lauren A.

Dear Lauren:

Looking at the glass half-full in a challenging 2020, at least interest rates are at an all-time low. As a result, our firm has handled more refinancing title transactions this year than ever before. The items you note above are important in determining whether a refinancing is right for you. We have seen rates routinely below 3%, but let’s use 3% as our refinance rate for this example. 

The total costs of the refinance for a recent client at the same balance you had was about $5,300.00, which included all bank and closing fees. Based on the difference in interest rates and the balance of $230,000, about $4,600.00 in interest will be saved in the first year. So, for this client, who also intended to remain in the house for several years, this refinancing was an excellent financial decision. The greater the difference in your current and new interest rate, the greater the savings in interest each year. As you can see, if my client intended to move in the next 12 months, I would have advised them to not refinance based on the costs and benefits.

The lending market is highly competitive right now, so taking the time to shop around for the lowest rates and bank charges could lead to a money-saving 2021 and beyond. 

To you and all those reading this column, the attorneys and staff of our firm wish everyone a healthy and happy 2021!

Eric P. Feichthaler has lived in Cape Coral for over 33 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.