Dispelling re-financing myths

Everyone loves saving money, especially when it comes to most homeowners’ largest monthly expense: the mortgage. Maybe you’re looking to cut that bill by refinancing your mortgage. Or maybe you’re thinking about refinancing because you’re afraid interest rates are heading up and it’s your last chance to grab a better deal.

Mortgage rates are still historically low and you may have plenty of loan options, but take some time to figure out whether refinancing is your best move right now. How long you plan to stay in your home, your financial goals and your credit profile all play a role in your decision about whether — and when — to refinance.

DISPELLING REFINANCING MYTHS

“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing can not only lower your monthly payments and help with your monthly budget, but it can save you thousands of dollars in the long run.

Before you dive headfirst into refinancing, sit down with a lender and do the math to see if you’d break even in a period of time that makes sense. Take a thorough inventory of your financial goals, and think about how your current home will fulfill future space and location needs.
Don’t forget that if you’re struggling to pay your mortgage each month and you don’t qualify for a conventional refinance loan, Fannie Mae and Freddie Mac refinance programs can lessen your financial burden.

Saving money on your mortgage helps you build wealth, and who doesn’t love doing that? If now isn’t the ideal time to refinance, keep plugging away on your current mortgage payments and keep your credit in good order so you’ll be ready to strike when the time is right.

YOU’RE NOT TOO LATE.

For years now, we’ve been hearing that interest rates will be on the rise, and although there have been some small increases, you’re still in a great position to drastically lower your interest rate. The general rule is if your mortgage interest rate is more than one percent above the current market rate, you should consider refinancing.

IT’S NOT TOO TIME CONSUMING.

Don’t brush off refinancing just because it seems like a long and daunting process. An informational call with a lender to see how rates compare will only take a few minutes. There are also some programs for streamlining the application process. And besides, isn’t the amount of money you could save worth the time and effort?

ARMS CAN BE REFINANCED, TOO.

Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck, but ARMs can be refinanced, just like fixed-rate mortgages. You can even switch to a shorter term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.