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Signs that Say it is Time to Refinance

Your mortgage is not a one-shot deal; below you will find tips to help you determine if you’ll benefit from refinancing:

Sometimes we just want a do-over in life. And that’s true even when it comes to your home mortgage. Are you a few years into your 30-year commitment, and itching to change the interest rate, term or size of your loan? If you’re feeling this way, you’re not alone: this type of application (refinance), according to mortgage giant Freddie Mac, comprises nearly 50% of all mortgages applied for today! Here are some signs that you might want to refinance too:

You’re Feeling Anxious – Biting your fingernails over your ARM (adjustable rate mortgage)? Stop fretting about potential interest rate increases and switch to a fixed-rate loan.

You’re Feeling House Rich – You want a wad of cash – for home improvements, college tuition, a trip around the world — and your house has appreciated significantly since you bought it. Rather than taking out a separate loan, you could trade in your old mortgage for a bigger one, and pocket the difference. Cashing out the equity in one’s home, according to Freddie Mac, has become the most common scenario among borrowers that are refinancing their mortgages today.

You’re Feeling Poor – Again, your house has appreciated, but you have other existing debt that carries a higher interest rate than your mortgage. You can use the cash you get from refinancing to pay off that credit card.

You’re Feeling Settled – Even if you lower your interest rate and – by extension – your monthly payment, refinancing still might not make sense. That’s because there can be a lot of fees associated with refinancing – application and appraisal fees, to name a few – and they can easily run into the four-figure range. You want to be reasonably sure that you’ll be in your house long enough to recoup those costs through monthly savings. Do the math to see where you will stand. Click here for more of a discussion on the math.

You’re Feeling Squeezed– You need to lower your monthly payment and are willing to go with a longer-term loan, extending it from 15 to 30 years or even 30 to 40 years. This could work in reverse too: you have some extra money in the monthly budget and want to go from a 30-year to a 15-year mortgage. Doing so will likely get you a lower interest rate and pay off your home mortgage faster. If only we all had this problem!!!

You’re Feeling Responsible – Good for you! Through years of good financial behavior, you have put those earlier credit score dings behind you. If your credit score has improved significantly, you could refinance at a lower interest rate. Check your credit report, for free, once a year, at www.annualcreditreport.com.

You’re Feeling Cheated – Why should you be paying 7.5 % on your loan when your new neighbors just locked in at 6.5%? Visit our loan calculator widget (to the right on this screen near the top) to find out how much you could save by converting to a lower interest rate mortgage.

Do you need to read more before knowing if now is the right thing for you?  If so, read this article that I posted back in January for more more tools to help you discern if now is the right time to act.  Or, if you would rather talk about it, please contact me for a free consult.  Remember, my calls always forward to my cell when I am not in the office so you are welcome to call me in the evenings or on the weekends if you would like to talk.

Thanks for reading!

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