Have you been wondering whether it is a good time to refinance your home?
In this video, Mary Catchur answers the questions for homeowners today, with several factors you should consider whenever you think it may be a good time to refinance your home.
Hello, I’m Mary Catchur, I’m the owner of Marimark Mortgage.
We’ve been getting a lot of calls lately about people wondering if now is the right time to refinance. And you’ve probably been getting a lot of mail as well, telling you this is a great opportunity to refinance your mortgage. Well, how do you really know if it is the right time for you? Well, there’s a lot of things to take into consideration in making that decision. Of course, the first one is going to be interest rate. Everybody would like to get a lower interest rate than what they currently have, but how much of a change in interest rate do you need for it to really make a difference? Well, if you look this up online, you’ll get all kinds of varying opinions on that. Some people will say 2%, some people will say 1% lower, and some will even say as low as a half a percent So, why are there so many differences in opinion on this?
Well, it’s really because it depends on your personal situation. If you have a lower loan amount, then only a 1% or a half percent decrease in your interest rate probably isn’t going to make a whole lot of difference in your monthly payment. And then you have to evaluate what are the costs in obtaining that new mortgage. Is the benefit going to outweigh the costs? So that’s your first consideration, is it really going to save you money in the long run? And some of that can depend too on how long you intend to stay in the home. If it’s going to take you 60 months to recoup the costs of refinancing that you know you’re only going to be in this home for three years, then that just doesn’t make sense. The second thing you’re going to wanna consider is shortening the term of your mortgage, that’s another good reason to refinance. So you may have a 30-year loan which you’ve been paying on for a few years and decide you’d like to pay your loan off more quickly, so maybe a 15-year loan is the right choice for you.
It may not necessarily decrease your payment amount, because you’re shortening the term that you’re going to pay the loan, however, you’re going to pay that loan off more quickly and save a lot in interest over the long term. Another thing that’s a very important consideration is, do you have mortgage insurance on your loan currently? If you do, and your home value has been increasing while you’ve been paying down your loan, you may have enough equity in there to where you no longer require mortgage insurance, and that can be a savings of hundreds of dollars. The fourth reason you may consider refinancing your mortgage, is again, if you have a lot of equity in your home and you might wanna take cash out. So you would do a cash-out refinance instead of just a rate-and-term refinance. This allows you to use the equity that you’ve built up in your home for other purposes.
A really good use of these funds is particularly if you are paying a lot of high interest credit card debt. You can consolidate that debt in with your existing mortgage and probably save hundreds of dollars on just making those minimum interest payments every month. So, again, how do you know if it’s the right time to refinance? Sure, you can try to figure this all out on your own, but why not give us a call at Marimark Mortgage? We can walk you through each of these scenarios, help you determine your personal goals, and come up with the right solution for you. Give us a call: 813-910-8020, Marimark Mortgage.