When is Refinancing Worth it?

Have you ever heard the old rule of thumb that states you should only refinance if your new interest rate is at least 1 percent under your current rate? Perhaps several years ago that was wise advice, but as refinance costs have been falling recently, it could be time to look into it. Refinancing your mortgage loan has some advantages that often make it worth the initial cost a few times over.

Advantages

You might be able to lower your interest rate (sometimes significantly) and reduce your mortgage payment amount with a refinanced mortgage loan. You may be able to eliminate  private mortgage insurance since home values have been increasing.  You also might be given the option of tapping into your home equity by "cashing out" some funds to fix up your home, consolidate debt, or take your family on a vacation. With reduced rates, you might also be able to build your home equity faster by changing to a shorter-term mortgage.

Fees and Expenses

All these benefits do come with some expense, though. When you refinance, you're paying for most of the same things you were charged for when you got your existing mortgage loan. These can include settlement costs, an appraisal, lender's title insurance, and others. Often times you will be able to skip a payment reducing the cost of the refinance.

Do the Math

All things considered, for most people the amount of initial costs to refinance will be paid back soon in savings each month. I will work with you to determine what mortgage program is the ideal fit for you.  We will look at how likely you are to sell your home in the near future, and what will be the effect refinancing. 

I can help you do the math! Call me at 623-202-3142 to get started.