Low mortgage rates have sparked many homeowners to ask about refinancing. Aside from interest rates there are a few things to consider before filling out a loan application.
First, a big precursor to refinancing is whether you plan on staying in your home for the foreseeable future. Generally, it takes a year or two to cover the costs of refinancing. Selling prior to the breakeven point is not a sensible move.
Next, determine your goal. Are you looking for a lower mortgage payment? Do you want to decrease the term of your loan? Is it time to switch out of an adjustable rate mortgage? Defining your goal can narrow down the best type of loan.
Find out how much refinancing will save you. A decrease in interest may sound attractive but when you quantify it with the terms of the monthly payment or lengthening the life of the loan it may not make sense.
Consider the expense of refinancing. The typical fees include the application fee, appraisal report, credit report fee, attorney/legal fees, loan origination fee, taxes, title insurance and more. These costs are paid upfront and often added to the loan amount – increasing the payoff.
If you are ready to research further – talk to a professional mortgage specialist and ask for a quick analysis of costs and savings. If you have questions we are happy to be a sounding board for your financial decisions.