Should You Refinance Your Home?


Filed under: Mortgage News


Happy Mature Couple Jumping Outside HomeDuring times when mortgage rates are at historically low levels – like right now – many homeowners ask themselves whether refinancing their loans would be a good idea. If you have a good credit score and reliable income, you may be able to shave half a percent or more off of your interest rate. But refinancing isn’t right for every situation. Ask yourself these questions before taking the leap!

Is it worth the cost? Remember that there will be a few upfront costs associated with refinancing your home. Items like attorney fees, bank fees, title insurance, and an appraisal will generally amount to $3,000 to $5,000. You may be able to roll these fees into your new loan, but will doing so negate the savings you earned with a low interest rate?

Getting a lower interest rate on your mortgage will save you money each month, but make sure you will be in the home long enough to recoup the few thousand dollars you put into the refinance fees.

How long do I plan to stay in my home? It doesn’t make sense to take on those extra fees if you plan to sell the property within the next year or two. Consider, also, that you may be adding years to the life of your loan. If you’re considering a 30-year mortgage, will you still be making payments when you retire? Can you afford to do that?

Another option is to refinance with a shorter repayment term, such as fifteen or twenty years. You may earn an even lower interest rate by doing so, but your payments will of course be higher if you go this route.

Have I considered taxes and insurance? Most online calculators don’t accurately estimate these items. For the most accurate numbers, contact Bill Provost at 760-282-4415. We will be happy to put together a quote for you, based on today’s super-low interest rates, your home’s current tax value, and an accurate estimate of your insurance expenses.