Oct. 26, 2019

Column - August 2019

Is Refinancing Right For Me?

With the recent lower interest rates, homeowners are wondering if they should refinance their mortgage.

So, how does it work?  Basically, you pay off the original mortgage and replace it with a new one.  The terms and interest rate on the new loan may be different, but the property securing the loan is still the same.  It's often easier to refinance than it was to obtain the original loan.  Plus, if you've owned your property for a long time, you may have significant equity, which can make it even easier.

It isn’t free!  Refinancing has almost as many costs as your original mortgage:  closing costs, title insurance, appraisal fees, taxes, and transfer fees are all possible costs.  There’s no such thing as "no-cost" mortgages.  But, it might be possible for you to get a refinance where the costs are rolled into the new loan, or a “no out-of-pocket” mortgage.  It is very important to determine whether the savings you will incur, will offset the costs. 

The most common reasons to refinance are:  (1) Lower your interest rate and/or payment, (2) Shorten the term of your loan, (3) Cash-out refinance (cashing out your equity to invest in something else).

Consider how much longer you are going to be in your home.  If you are staying for more than 3 years - it might be worthwhile to refinance.  But, if your current home isn’t fulfilling your present needs, you might want to consider using your potential refinance costs for a down payment on a home that will fulfill them!  

You will still get a lower interest rate than the one you have on your current house, and with the equity you've already built, you can finally purchase the home of your dreams.

There are many opportunities in today’s real estate market.  To determine what's right for your family, give me a call.  I can introduce you to a great lender who can help you understand what options are best for you!