Is Refinancing Your Home the Right Option?
If you’re thinking about refinancing your home, there are a few points I want to share with you today that you need to take into consideration.
Most of the time when people consider refinancing their home, they’re motivated purely by a decrease in the interest rate that they’re paying on their current loan versus what rates are today. There are a couple of important things you should consider before going through with a refinance.
The first is what it will cost you. There will most certainly be some closing costs involved, and those will probably cost you in the neighborhood of a few thousand dollars. Make sure you will recoup the savings you have in your monthly payment versus what it’s going to cost you.
The next thing to consider is the term of the loan you’re financing into. If you go from a 30-year loan to another 30-year loan, there will be some relativity. If you want to refinance to shorten the term of your loan, that will lead to a higher installment but also some interest savings, and you will also typically pay a lower rate.
Finally, it’s important to remember that you’ll be starting from scratch. If you’ve had this loan for five or 10 years and you want to refinance into another 30-year loan, you may be saving some money month over month because you’re getting a better interest rate, but you’ll pay a higher percentage of interest in proportion to what your monthly installment is.
If you are looking to refinance, feel free to reach out to us so we can point you in the right direction. We look forward to hearing from you!