Refinancing
Certainly you’ve heard the news, read the ads, and seen the billboards – “mortgage rates are at historic lows!” “Time to refinance!” and so on. And it is true, for some homeowners now is a great time to look in to refinancing, but for others it might be best to just keep things as they are. The lure of lower monthly payments is tempting to all of us. But it is really important to do the math on a refinance to determine if you will be saving money in the long run. There are three key considerations to make as you start determining if a refinance is right for you. Consider these three things:
- How much can you reduce your interest rate?
- How much will you pay in closing costs?
- How long do you plan on living in your home?
These days mortgage experts will tell you that you should consider refinancing even if your rate will only drop by half a point (the old rule of thumb was waiting until you could get a rate two points lower than your current rate). But if your closing costs are $3,500 and you only plan on staying in your house for another two or three years, you may not recoup the cost of closing.
Another option is to shop around for “zero-cost” financing. While the name is misleading (it’s true name should be “zero-upfront-cost” financing), it may be a viable option for those with high interest rates. In zero cost financing you negotiate with the broker or lender to absorb your closing costs by raising your interest rate by a certain percentage (be it an eighth or a quarter of a percent). This method won’t get you the lowest possible interest rate, but if you are only staying in your home for a few years, it might be the best way to go.
The bottom line is that each situation is unique. The three considerations I mentioned earlier function on a sliding scale. We have partnered with some of the best mortgage experts in the state and would love to discuss a refinance with you. If you have questions about whether a refinance would be a solid move for your
mortgage, please don’t hesitate to
contact us!
Modifying Your Loan
A loan modification is where your lender agrees to adjust the original terms of your mortgage agreement. There are three varying factors that can be adjusted; interest rates, principle owed, and length of the loan. Usually you will need to deal directly with your mortgage company to secure a modification and more often than not they will only modify if your situation is dire and foreclosure looms in your future. If you would like to discuss loan modifications with us, please feel free to contact us, we are more than happy to help!
