In The News January 22, 2015

Should You Refinance?

There are many news headlines and stories about home owners "needing" to refinance their home loans. While we are at near record low levels for interest rates, before you refinance you should ask a few questions of yourself and loan officer. 

First, how low is your current interest rate? If it's not at least 1/2% higher than your new rate, it's not likely as wise.
Second, how long will you continue to own your current home? The longer you will continue to own the home, the more likely this can be beneficial. Next consider what the projected savings would be relative to the cost of the refinance. With these very low rates, you may want to consider selecting a slightlyhigher interest rate available for little to no cost for the refinance vs. the lowest possible interest rate. The shorter the time you might own the home going forward, the more important this consideration might be. Opting for 3.875% interest rate for no cost to you vs. a 3.5% interest rate that costs you 2-3% of your loan balance in costs, may make more sense. 

How long you've had your current loan and what the term of your new loan is will be another consideration. Whether you will be removing mortgage insurance or needing cash back from your home are also questions and considerations to make. There are many factors to evaluate and balance before you rush out and join the herd to refinance. If you'd like a recommendation for a good loan officer or to discuss your specific situation, let me know. I'd be happy to help.