Have You Refinanced Yet?

Have You Refinanced Yet?

With mortgage rates at historic lows, it’s the perfect time to consider refinancing your home if you haven’t done so already. If you’re looking for ways to cut costs and save money in 2021, then taking advantage of these current rates with a new loan should be at the top of your list.

Top Reasons to Refinance

As a homeowner, take the time to understand the benefits of refinancing your home before you move forward. This list highlights the top reasons to refinance, and you can determine if any of these could be part of your own financial goals in the coming year.

• Lower your monthly mortgage payment – This is usually the #1 reason, and it’s easy to see why. You’ll have more money in your pocket each month. Plus, you could lower your borrowing costs.
• Change your mortgage term for more equity – You could convert to a 15-year mortgage if you currently have a longer-term mortgage to gain more equity in your home and pay off your loan sooner.  You’ll be paying less in interest over this loan period but the total amount you pay each month will go up.
• Change your mortgage term for more cash flow — You could increase your term back to a 30-year mortgage if lower monthly payments and more cash flow are your priorities.
• Switch from ARM to fixed rate mortgage for more stability – If you plan to live in your home for more than 5 years, you may want to take advantage of lower rates on fixed loans now before your Adjustable Rate Mortgage’s discount period rises.
• Say good-bye to PMI – You could save hundreds by removing the mortgage insurance on your payment if it is on your current loan.

Understand the Process

Refinancing can be confusing for many homeowners, especially if you’re not sure if it will make financial sense or if you’re a good candidate for it even if rates are low. 

Don’t hesitate to reach out to me for help. I can provide you with options that are specific to your goals and help you determine if it’s a good choice for you after we access your break-even point and other financial factors. 

Let’s look at some important points about refinancing so you can better understand the process.

You do need to be qualified for the new loan.  Remember, this is a new loan and a new review of your finances since your last loan. We can go over the factors that will help you qualify to refinance.

Here’s a quick rundown of what we look at:

• Equity in your home if we are considering removing PMI;
• FICO credit score 640 minimum (Current requirement);
• Adequate home equity or loan-to-value ratio;
• Sufficient income to make sure you can make the new mortgage payment along with any other expenses;
• Employment for the past two years;
• Sufficient asset reserves (checking and savings account, stocks, bonds, retirement accounts);
• No loose ends such as unpaid bills and liens, etc.

There are costs and fees to refinancing.  It costs money to refinance and will it be worth it for you in the long run?  I can look at your current financial and personal situation to see if it makes sense to move forward.

• Don’t refinance if you plan to move sooner than later since it may take a while to actually recoup the cost of the refinancing. I can help you figure out the math and break-even point of how long you need to stay so you don’t lose money.
• The actual cost to refinance is usually between $3,000-$4,000 plus discount points if you are paying them. If you are able to roll those costs into the new loan amount, it can eat into money you saved with a lower mortgage rate.
• Refinancing costs typically include appraisal fee; processing fee, application fee. Plus, don’t forget there are closing costs, such as title work! Depending on how much equity you have, these costs may be able to be rolled into the loan amount.

I’m Here to Help!

If you haven’t already refinanced and you plan on staying in your home for a while, get to it.  No one knows how long these historically low rates will continue.  

Here’s how I can help as you consider the options:

•  We can talk through whether it makes financial sense to refinance now.  There are several factors to consider including how long you plan on living in your property, what your current interest rate and payments are, and how much equity you have in your home.  Refinancing doesn’t make sense for everyone, so let’s work together to find out what’s best for your situation.
• I can help you compare the options and pricing of a few scenarios available and help you make the best decision.
• I can help you make sense of the cost estimate and calculate your break-even point—the month when the monthly savings outweighs the cost to refinance.  That way we know for sure it makes sense to spend the time and money going through the refinance process.
• In addition to reaching out to me, it’s also a good idea to consult with your financial advisor.  If you don’t have one, I can recommend one, just let me know.
• I’d love to hear from you! Please contact me if you have any questions or want to talk through what makes financial sense for you.  Remember, I’m here for you!