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Trying to decide if you should refinance?

A lender can determine the potential cost savings and help you decide if it is worth it. Here are some factors to consider, which will help you get the most out of your conversation with the lender.

How long do you plan to be in your home?

You'll want to stay long enough so that the savings on your monthly payments allow you to recoup the closing costs associated with taking out a new loan.

What are you trying to accomplish?

Do you want to lower your monthly payment? If so, you may want a conventional 30-year loan.

Do you want to minimize the total amount of interest that you will pay over the life of the loan? If you want to save money over the life of the loan, a 10- year or 15-year mortgage may be the best bet.

How much will it cost?

Refinancing is about more than just rates.

Ask your lender to give you an estimate on the total cost of refinancing including new appraisals and other fees.

Fees vary so don't be afraid to shop around.

Do I have too much debt?

The lender will want to know how much you make and how much you owe in credit cards, car loans and other debts to determine if you are eligible. The lender will also likely ask about job security and if you expect any changes in income in the near future.

What about my second mortgage?

If you have a home equity loan or a second or third mortgage, it could pose problems for refinancing unless you have significant equity in the house.

Should I consider an adjustable rate mortgage?

Consider taking out an adjustable rate mortgage if you plan to stay in your home five to seven years or less, which is the national average for moving on.

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