People Are Asking: Should We Refinance?

When refinancing your loan, you must look at the big picture to see if it really makes financial sense for you. Since rates are at an all time low, many people are considering it. Here are some ways to help you decide if it will benefit you or not.

If you have plans to pay off your loan in the next few years it makes no sense for you, as you will not be able to recover the re-financing fees in time. Same thing goes if you are planning to move and sell in the next few years.

If you are planning to stay in your home for many years and currently have an Adjustable Rate Mortgage, then refinancing now to a 30 or 15-Year Fixed is a very good option for you. Refinancing may not lower your monthly payments by all that much, but you may sleep better knowing that those payments will never go up... and they will be going up.

Another good reason to refinance is if you are currently paying a very high rate. A very good rule of thumb is to calculate your costs and make sure that you can earn back the roughly $2,000 in fees that you will pay, within two to three years. If you try and justify a longer amortization unforeseen plans may cut you short.  With the amount of money the government is borrowing it is going to effect interest rates in the future…it has to.

Two other things to consider are that if you are paying less interest over time, you will pay more in Federal and State taxes (as long as the principal residence interest tax deduction stays in place). Also, money that you pay in refinancing fees could be invested instead. Think of the return on that sum you could earn over thirty years!

Check with your lender, if you don't have a lender we would be happy to recommend some that we personally know are honest and will have your best interest at heart...we know who the best lenders are, we work with them every day.