Refinancing….Yes, No or Maybe?
~ Lowering your current interest rate on your mortgage, thereby reducing monthly payment amounts and the overall cost of your purchase
~ Reducing the term or length of your loan…..this can save you thousands of dollars in potential interest paid over the life of your loan
~ Consolidation of your debt…..you can consolidate all of your debt at a lower interest rate and write your new mortgage interest payment off on your taxes
While all of these considerations are very legitimate reasons to refinance, you must consider the costs associated with the refinancing process. Loan origination fees, an appraisal, processing fees, title fees….they all add up. Depending upon your circumstances, if you can get an interest rate at least a full point lower than what you currently have, it is worth making the call to a qualified lender to see what refinancing may mean to your financial future.
Keep these questions in mind when you make the call:
~ Do I have the equity in my home to allow for the refinance? (This is especially important to ask if you plan to pay off current outstanding debt, in an effort to consolidate your debt.)
~ How much can I lower my current monthly payment?
~ How long do I plan to stay in my home?
~ How much will I pay in upfront fees to refinance? and Can I build some of these costs into the refinance, so that I don’t have to come up with the fees out of pocket?
Last, but certainly not least, be sure to consider the following:
How long will it take to recoup the cost of the refinance?