Refinance Considerations When you're making your decision, there
are several things in mind.
First, even a small rate cut can pay off quickly. That's
because you can easily find mortgage companies willing to waive routine
refinancing charges such as application, appraisal and legal fees (which
can add up to $1,500 to $3,000). Of course, in exchange for low or no up-front
costs, you'll have to be willing to accept a rate that's somewhat higher
than the prevailing rock bottom.
Second, if you are planning to stay in your home for
at least three to five years, it may make sense to pay "points"
(a point equals 1% of the loan amount) and closing costs to get the lowest
available rate.
And third, you can avoid laying out cash and still
get a low rate by adding the points and closing costs to your new mortgage.
Does that mean shouldering a lot of extra debt? Not necessarily. If you've
had your current mortgage for at least three years, you've probably reduced
your balance by several thousand dollars. So you may be able to tack your
closing costs onto your new loan and still end up with a mortgage that's
smaller than your original one -- plus, of course, a lower rate and lower
monthly payment.
Should You Refinance?
The risk involved in refinancing your current mortgage
is nearly non-existent. If you think you'll save money by refinancing, now
is a good time to act. Thousands of people refinance their homes and
save money every day, look at some of the benefits of refinancing today.
Refinancing your home loans
can allow you to take advantage of these benefits
Lower interest rates resulting in lower
monthly payments
Consolidate high interest rate,
2nd liens, home improvement and/or swimming pool loans or credit card
balances into one lower interest rate mortgage and better terms
and tax deductible interest costs
Make Home Improvements and make your home
a better place to live.
Get Cash Out to spend as you wish.
Use it for vacations, tuition, starting a business.
Shorten your term to Build Equity Faster.
Trade your ARM in for a fixed rate loan and lock
in long term savings.
Current appraised value - not purchase price is
used to calculate LTV ratios. (if you have owned the property for
over 6 months) You may be able to avoid PMI costs.
Pay off balloon payments or call provisions
on your current loan.
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