Refinance Your Home

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How to Tell When it is Time to Refinance

Why Should You Consider Refinancing?

In addition to just lowering your inter- est rate, there are eight major reasons why you should take advantage of refinancing:

1) Maximize short term cash flow with lower payments or a longer term.

2) Decrease monthly payments for as long as you plan to be in your home.

3) Switch to a fixed rate program to eliminate payment changes of ARMs.

4) Build up equity by paying down principal more quickly.

5) Match your loan term to the years until your retirement.

6) Switch out of an adjustable loan with old high lifetime payment caps.

7) Withdraw funds from the equity in your home for tax deductions.

8) Consolidate other debts to take advantage of tax deductions.

Would Refinancing Be Worthwhile?

Refinancing can almost always be worthwhile, but it does not make good financial sense for everyone. There are four main factors to analyze when determining the costs and benefits of refinancing:

1) What will be the difference between the old rate and the new rate?

2) What are the total costs associated with the refinance transaction?

3) How closely is the loan term matched with the expected holding period of the loan?

4) How comfortable are you with possible payment changes over the life of your mortgage loan?

The savings you can obtain from refinancing depend directly on the answers to the above four questions. There are numerous potential combinations of the above four areas, and there are numerous mortgage programs to meet each need.

What are the Costs of Refinancing?

The costs of refinancing have decreased greatly in the past several years. With no-point loan options, for example, borrowers can save thousands of dollars up front. Also, closing costs can be included in the new mortgage loan amount so that no cash is required to execute a refinance.

As part of a free Refinance Analysis, your mortgage lender or broker will give you a specific breakdown of all closing costs for the recommended programs. You will then be able to calculate your savings exactly.