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Should You Refinance?
There are several reasons that might make someone consider refinancing their existing mortgage. One would be to get a lower interest rate than what they currently have, thereby reducing monthly payments and lowering the overall cost of the mortgage. Another is to shorten the length of the loan, which can save quite a bit in interest payments. Thirdly, someone may have other debts that they wish to pay off, and refinancing may provide them a means of consolidating that debt into one overall lower payment.
A lower interest rate isn't the only thing that should be taken into account when thinking about refinancing. There are costs and fees associated with refinancing your mortgage. The bank will charge fees, there will be costs for a new inspection and a new appraisal, title search, and so on. The process that is gone through is very much like the process that one goes through on getting a first mortgage. It requires a new application with a new credit check, survey, and sometimes an appraisal. As it is with a first mortgage, this can be a long and costly process.
In general, it makes sense to refinance if the interest rate on the new loan is at least two percentage points lower than that of the current loan, although this is not always the case. Some things that need to be taken into consideration are the total cost of the refinancing, the total monthly savings, and how long you plan to stay in your house after you refinance. You can calculate how long it will take you to break even on refinancing costs by dividing the total cost of the refinance by the monthly amount you will be saving. For example, if the cost is $2,500, and you reduce your monthly payments by $100, then it will take 25 months to start seeing the savings from the reduced mortgage rate. If you plan on staying in your house longer than this, then it may just make sense for you.
Another reason that someone might consider refinancing is if they are trying to consolidate debt. In such cases, there is also the tax impact that one should look at. Many loan types are not tax deductible, whereas mortgage loans are. Therefore for that reason alone it may be a good idea to consolidate outstanding credit card debt, student loans, car loans, as well as others.
Some people may not have a choice about refinancing, it is a must for them. This happens in cases where they have a loan with a balloon payment coming up and no conversion option. In instances like this the best bet is to refinance the mortgage a few months before the balloon payment is due.
If you do decide that the costs associated with doing a refinance outweigh the benefits, you should ask your bank or financial institution if you can get some of the terms that you want by agreeing to a modification of your current loan. However you choose to go, remember that it always makes sense to consult with a mortgage professional before making your move. This can end up saving you both time and money. You should also do research before making a decision. Spend some time on the web familiarizing yourself with what you are getting yourself into. Take the time to read up on and understand what your options are.
More on Mortgage Refinancing.
MORE RESOURCES updated Mon. March / 08 / 2021
Today's mortgage refinance rates — 30-year rates sit at the lowest seen in 13 days | March 5, 2021 - Fox Business
Today’s mortgage refinance rates mixed — one key rate drops while another rises | March 2, 2021 - Fox Business
Today’s mortgage refinance rates mixed — one key rate drops while another rises | March 2, 2021 Fox Business
Today's mortgage and refinance rates: March 7, 2021 | Rates go down Business Insider
Can refinancing a mortgage hurt my credit score? Fox Business
Best mortgage refinance lenders in 2021 Bankrate.com
Best cash-out refinance lenders in 2021 Bankrate.com
Mortgage rates are falling to unprecedented lows in 2021 — refinance now to save money - Q13 FOX (Seattle)
Mortgage rates are falling to unprecedented lows in 2021 — refinance now to save money Q13 FOX (Seattle)
How to refinance an FHA loan | Mortgage Chase News & Stories
Mortgage Recast: How to Reamortize and Save Money Credible News
Can Closing Costs Change On The Closing Disclosure? The Mortgage Reports
2021 Maine first-time homebuyer assistance programs Bankrate.com
David Hochberg: Can homeowners refinance after forbearance? WGN Radio - Chicago
3 signs you should refinance your mortgage right now Fox Business
The Lending Issue: Ready, Set, Close! Chicago Agent magazine
How do I get the most out of my mortgage refinance? Fox Business
Top 5 mortgage refinance questions answered Fox Business
How to decide if you should refinance your mortgage Fox Business
Pros and cons of a cash-out mortgage refinance Fox Business
How to refinance your mortgage Fox Business
Mortgage refinance: Everything you need to know Fox Business
Mortgage refinance rates continue hitting record lows – here’s how to get the best deal now - Fox Business
Mortgage refinance rates continue hitting record lows – here’s how to get the best deal now Fox Business
What are the hidden costs of refinancing a mortgage? Fox Business
Who's exempt from the new mortgage refinance fee? Fox Business
Everything You Should Know About The New Mortgage Refinancing Fee That Goes Into Effect Dec. 1 - Forbes
Everything You Should Know About The New Mortgage Refinancing Fee That Goes Into Effect Dec. 1 Forbes
How to refinance your mortgage in 5 easy steps Fox Business
Mortgage refinance applications soar despite a new fee that increases the cost - Pittsburgh Post-Gazette
Mortgage refinance applications soar despite a new fee that increases the cost Pittsburgh Post-Gazette
Refinancing your mortgage? Don’t make this mistake Fox Business
4 ways to get lower mortgage refinance rates Fox Business
Despite low mortgage interest rates, homeowners should research the caveats before reﬁnancing - Seattle Times
Despite low mortgage interest rates, homeowners should research the caveats before reﬁnancing Seattle Times
The best mortgage refinance lenders of March 2021 Business Insider
A record 19.4 million homeowners can now save big on a mortgage refinance, as rates hit another new low - CNBC
A record 19.4 million homeowners can now save big on a mortgage refinance, as rates hit another new low CNBC
5 reasons to refinance your mortgage right now HousingWire
How to Refinance Your Home | Home Lending Chase News & Stories
10 things to know before refinancing your mortgage Fox Business
3 Mortgage Refinance Strategies to Consider in 2021 The Motley Fool
Complete Checklist of Mortgage Refinancing Requirements Credible News
10 tips for getting the best mortgage refinance rate, from checking your credit report to choosing the right lender - Business Insider
10 tips for getting the best mortgage refinance rate, from checking your credit report to choosing the right lender Business Insider
Jumbo Mortgage Refinance Rates for March 2021 NextAdvisor
USDA Construction Loans | Buy Land & Build A Home With USDA The Mortgage Reports
How to get a low-cost mortgage refinance Bankrate.com