See Jane. See Jane finance her home purchase with a fixed 6.25 percent mortgage rate. See Jane smile, as that was the best deal at the time. Four months later see Jane cry as the mortgage rates slip below the 5 percent mark. What should Jane do? Refinance her mortgage of course!
Buying a home is generally the most expensive purchase a person can make during their lifetime. Aside from the negotiated purchase price of the home there are additional expenses such as closing costs and mortgage fees to pay. Upon refinancing a home, many of those additional expenses may resurface. If you are debating whether or not to refinance your mortgage some thoughts you should ponder include:
Three Dog Night sang, "One is the loneliest number," however if you are debating refinancing, that is the magic digit. If the current mortgage rates are a full 1 percent lower than your loan, refinancing may be a viable option as that small digit can convert to savings of tens of thousands of dollars over the lifetime of your mortgage. That is because interest fees on mortgages are compounded.
Refinancing a mortgage is very similar to securing one for the first time. Points may be involved, closing fees may be due and the process can initially cost thousands of dollars. However, if you plan on staying put for years it may be worth the initial expense for the long-term savings.
Not all mortgages are created equal and if you previously committed to an adjustable rate mortgage (ARM) with a balloon payment, refinancing your mortgage before the payments spike can be a very smart move.
Let us see how Jane decided that refinancing was a smart move. The first step she did was to locate the best mortgage offer around. Based on her credit history and proof of income she ended up qualifying for a 4.875 mortgage rate (over 1 percentage point less than the original loan). Plus there were no points to pay (bonus). However, the process would still cost her around $4,000 up front, ouch! By using a mortgage break-even calculator the expense for the new mortgage weighed against the long term savings from her lowered interest rate would allow the new debt to be repaid in three years. Since Jane planned on staying in her home for at least ten years, that made financial sense.
Not everyone has a perfect mortgage scenario like Jane, however by taking the time to crunch the numbers you too may determine that refinancing your mortgage is the right thing move for you!
ไม่มีความคิดเห็น:
แสดงความคิดเห็น