How to Know When It’s Time to Refinance Your Mortgage
There are many reasons to refinance a home including:
Lower your interest rate to reduce the monthly mortgage payment;
Shorten the term of the loan to save possibly thousands of dollars in interest;
Take cash out to consolidate other debts.
These are all great reasons to refinance your mortgage, however, a few items should be considered first. A refinance is very similar to when you closed on the purchase loan for your current home. You will need to submit and application, credit will be pulled and you will need to be approved by the lender. Once you are approved an appraisal will be ordered as well as a title examination.
As a general rule, it makes sense to refinance if you can get an interest rate that is at least one percentage point lower than your current rate. Every situation is different and there may be other reason besides lowering your rate that might make sense. For example, if the purpose is to take cash out in order to pay off high interest credit cards, than even if the rate stays the same, it’s possible to save money on your overall monthly expenses.
Questions To Ask Yourself:
How long do I plan on staying in this house after I refinance?
How much lower could I get my monthly mortgage payment?
How much will it cost me to refinance?
Once you have the answers to these questions, you can figure out if a refinance makes sense and when you will break even. Divide the cost of the refinance by the monthly savings and you will have the number of months it will take for you to break even after the refinance.
Keep in mind that you do not always have to start the clock over with a 30 year fixed. If you want to stay on track to pay off your mortgage around the same time as when you started, you can choose a shorter term mortgage. For example, if you are 5 years into a mortgage and rates improve, you can take a 25, 20 or a 15 year mortgage to stay on track or even shave off a number of years. A scenario like this could save thousands of dollars in interest over the life of the loan.
It is wise to ask the person who is handling your loan for a good faith estimate along with your mortgage rate quote. This way you can know exactly how much it will cost you to get the payment that is offered. Taking these calculated steps is necessary to know if refinancing now will make sense. Numbers don’t lie, so make sure you take the time to do the math correctly and have a clear understanding of your goals.
Mike Dell’Ovo is a licensed mortgage broker who helps borrowers achieve their mortgage goals. If you would like a no-obligation mortgage consultation and a rate quote for your next purchase or refinance, visit: http://www.MortgageWorkbench.com/contact.htm to contact Mike
What Is Your Home Value? Visit: http://www.LocalPropertyValue.com/ for your FREE Value Report
Watch the video related to other refinance
These are nervous times for banks all around the globe as they try to refinance debt they owe to banks in other countries. The international inter-bank credit markets virtually froze this week as banks stopped trusting each other. They were petrified in the wake of the shock collapses of AIG, Washington Mutual and Lehman Bros, the forced mergers of Merrill Lynch, Halifax Bank of Scotland and Wachovia, and the bailouts of Fannie Mae, Freddie Mac, Bradford and Bingley, Fortis and Dexia. …
Help answer the question about other refinance
Can a spouse refinance a mortgage alone if the other is not working?The situation is this. My wife and I bought a home b4 we had kids. she is now a stay-at-home mom and does not have a paying job. We want to refinance to lower the payments. Does the bank require a credit check on both spouses or is it normal that they only care about the one who has a job? Any mortgage professionals out there with the real answer? Really appreciate it. Thanks.
About Author
Mike Dell’Ovo is currently a mortgage adviser for Mortgage Captain, LLC. in Medway, MA. Mortgage Captain, LLC is a retail mortgage broker offering all types of loans through unique relationships with top lenders.
Mike has been in the mortgage business since 2001 and has expertise with many loan products including conventional loans, 100% VA Loans, 97% FHA finanicing, reverse mortgage, investment property financing, foreclosure, and short sale financing.
Mike is also an experienced real estate investor who enjoys buying and remodeling property for profit. He enjoys to help and teach clients how to realize their real estate dreams and aspirations.
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September 10th, 2009 at 4:46 pm
Call your lender and explain you need to refinance. They may work with you. If they do not-there are lots of ways to be helped. Use a private real estate investor as they are aware of many different ways to help. Just be careful, there are a lot of scam artists our there right now preying on folks in your situation.
September 10th, 2009 at 6:04 pm
Shop around for other lenders. You might want to try Lenox Financial, lnxloans.com.
Avoid foreclosure at all costs. The ramifications to your credit are significant.
Another option is to contact the people at HouseBuyerNetwork.com to see if they have a quick sale agent in your area or an investor skilled in short sales. Their service is free to you.
Contact a tax professional prior to making any final decisions.
Good Luck!
September 10th, 2009 at 10:58 pm
Yes, unless after foreclosure you declare Bankruptcy. Chapter 13 limits the amount they will get and Chapter 7 liquidates all your other assets over a certain amount and pays this to all your creditors.
After foreclosure, if the bank is still owed funds, this is then an unsecured debt that you still owe them and they have every legal right to pursue you for it.
Unless you've lost your job, or really cannot afford to make the payments, do not let the house go into foreclosure. It may take a few years to regain its lost value but it will happen and why destroy your credit because you think you are paying too much now? How about your car; it is not worth whatever you paid for it (unless it is a collector car), do you drive a car off the lot and abandon it immediately because of its lost value?
September 10th, 2009 at 5:36 pm
I want to thank you, Bernard Hickey for your quality reporting. You are a great source for news and information that I am unable to find here in the United States.
September 10th, 2009 at 5:47 pm
Ourgovernment has lost control of the printing of its own money to the so-called RBNZ. This is merely a deceitful name. It is none other than a private bank which answers to the Banking cartel which directs monetary and therefore social policy.
What do you think causes inflation? It is the stolen value from our dollar through interest payments that our government has to make to the RBNZ that it borrows! yes! Our governmnet is indebted to a private firm!
Wake up NZ!!
September 11th, 2009 at 7:14 am
If you live in a community property state your wife's credit will be pulled and any debt that she has that is not joint will be held against your debt to income ratio. If you qualify with just your income you should be fine.
September 11th, 2009 at 11:49 am
Try http://www.lendingtree.com (fantastic service) , your local bank or credit union.
September 11th, 2009 at 7:00 pm
Republicans screwed the nation and the world.
Heres what happened in the financial crisis that could not have happened on a worse time as in this month.
Both parties agreed that part of the members should vote against to keep so that as well Reps as Dems could not get the blame but global economy would have been saved.
12 REPTILES didnt stick to the agreement. What do we have, Reps gained more voters and could blame Dems and a recession. We feel screwed by the Reps.
WHY DONT YOU
September 12th, 2009 at 7:11 pm
Maybe they systemic collapse of iinternatioinal banking as a result a derivatives meltdown will conflagrate all the banks and we`all get to keep our houses …:-)
September 13th, 2009 at 9:00 am
You qualify by having enough income and steady employment. Contact your current lender.
September 13th, 2009 at 5:24 pm
it depends what kind of loan it is and how much money , if it is a personal loan you can use the money for anything , if it is a car loan the car is collateral and you have to use the money to buy the car.
refinancing a car is going to waste a lot of your money.
the smart thing is make the payments you agreed to in the first place and pay off your credit card bill with every extra penny you have.
credit card debt can ruin your life , i would drive a old car and pay off my credit card bill first thing.
if you do not have enough money to pay your bills you need a second or third job until you sort yourself out.
since my answer isn't easy you probably don't like it , but i am giving you cold hard truth.
September 13th, 2009 at 10:04 pm
Going to Realtor offices these days usually nets you nothing. After all, everyone who has transactions already uses someone, and most offices don't even let you in any more – many have an in-house lender already set up.
You need to network and you need to differentiate yourself from the pack. You are new, so show your hunger, your enthusiasm, and your dogged determination, as well as sell your unique personality and qualities. Specialize into an area that interests you and know that market inside and out to maximize what you will get to be known for. Soon, you will hear – "Ask Monica, she is an expert on condo conversions".
Stay positive, put in more work than you now expect, and get ready for a lot of rejection and a long road to attain some beginnings of success. Most Loan Officer are out of the business within a few months or a year.
Buying leads can be tricky, many long-timers steer away becasue they can't get returns on leads that are oversold and undercut on pricing.
This is a tough, competitive business – can you hang? No Realtor wants you until you've shown your stuff on a long-term basis.