Should I Refinance My Home Mortgage
Home mortgage rates are at historic lows and many homeowners are considering refinancing their home loan to lower their payment. Here are a few things to consider so that you are making a sound financial decision. First, comparable home sales need to support a value for your home such that you have the proper loan to value ratio. If your loan amount is higher than 80% of the appraised value you may have trouble getting the desired interest rate. Second, make sure you find out the cost of the loan. Many lenders will advertise “no cost” refinances but they typically just roll the costs into the loan balance. The savings in your mortgage payment each month will eventually pay for the costs of getting the loan and your lender should be able to tell your payback period for recouping your costs. Make sure you don’t have plans to move before you recoup your costs. Third, evaluate the total interest costs left in your current loan versus the total interest costs in the new loan. If you have 15 years left on a 30 year loan you may find that it’s smarter not to refinance because you have so little interest left to pay on the loan. Remember, the interest on amortized loans is paid mostly toward the early years of the loan.
There is a good Refinance calculator on Realtor.com under the Finance tab that will help you evaluate the total interest costs left on your current loan and the interest costs on a new loan. Also, the general rule of thumb is that it’s worthwhile to refinance only if rates are a full 1% lower than what you have. If you have any questions on refinancing or want me to put you in touch with a lender please call me at 720.203.9624, or email [email protected]. – Todd Groth – Metro Brokers, Cherry Point Secretary/Treasurer. http//www.BevGrothProperties.com