By now most people have heard that interest rates on home mortgages have been low for many months, but how do you know if it makes financial sense for you to refinance? Fortunately, its relatively easy to analyze this even if you have never considered yourself financially sophisticated. There are several relevant factors. You will need to know what your current interest rate is and the principal amount due on your mortgage. You will also need to know the average current interest rate being charged for 30-year mortgages, or 15-year mortgages if that may be an option for you. This can be quickly determined with a little research or a few quick calls to loan officers. Today’s technology allows us to easily calculate what our monthly payment would be if we refinanced, as there are many free apps with loan amortization calculators that allow users to input their potential loan amount and interest rate and receive instant results.
Who are the most likely candidates for a refinance? The list is lengthy: those who want to lower their monthly housing payment, anyone with two mortgages who may want to combine their loan into one mortgage, those who think they may be eligible to eliminate their PMI (private mortgage insurance), or even those who wish to use their equity to take some cash out for a home addition, tuition payments, or other expenses that would otherwise have to be borrowed at a higher interest rate. You will also need to factor in the closing costs, which can often be added into the loan amount, but its always worth shopping around to compare closing costs. The costs can vary widely, as can the customer service that you receive. It is almost always best to have an actual loan originator working on your file, as opposed to filing an online application. That way, if any problems arise, you have a person to call who has a vested interest in addressing the issue in a timely manner.
For most people, their home is their biggest investment and paying for it is one of the longest term financial commitments they make. Make sure you are not overlooking an opportunity to save money for decades to come.
The real estate department at Brown Paindiris & Scott, LLP has the experience you need to help you streamline the refinance process so you do not miss out on this opportunity.