When to Refinance

Refinancing Your Mortgage
It has been said that only when you should look for your interest rate to decrease by at least 1 to 2 percent. This is rule is flawed. The savings for each person’s loan can vary greatly based upon several different factors. Factors such as current loan balance, cost to refinance, and how far into your current loan term you are all play a part into the decision. A customer with a loan amount of $400,000 can realize substantial savings even when lowering their rate only .75%.

If you are not sure if you would benefit from refinancing then please feel free to contact us for a no obligation consultation. You may also complete our Rate Quote or Rate Tracker Form.

Reasons For Refinancing
The most popular reason to refinance is to lower the interest rate and therefore the monthly payment. Many people can benefit from decreasing the term of the mortgage and therefore save tens of thousands in interest over the life of the loan. You may even save when considering to sell in the upcoming years. With adjustable rate mortgage rates currently under 3%, significant savings can be realized inside of 5 years.

Expenses and Fees
As you probably know, there are ‘closing costs’ or mortgage fees when one refinances. Closing costs can be organized into three general categories. Lender fees, attorney fees and pre-paid/ escrow reserves. Although not a perfect rule, up to half of the costs ‘wash’ due to an escrow refund from the old lender and skipping one month’s payment. Lastly, if your equity position allows, all the costs associated can be financed as part of your new loan. You may of course choose to pay some or all of your costs to keep your new loan amount lower. Call or email anytime for a free cost estimate to be prepared.

Most borrowers find that the savings each month quickly outweigh the up-front cost of refinancing. We can help you explore what your options are, considering the effect a refinance could have on your taxes, how likely you might be to sell in the near future, and the amount of your savings.

Questions about refinancing? Call us at 302.227.4747.