Let’s Talk Refinancing!
Are you thinking about refinancing?
One great question we get from our friends and clients relates to refinancing your existing mortgage. When is the right time to refinance? Basically, when you are refinancing, you are purchasing your home again. There are benefits and there are costs associated with this.
Time: How long do you plan to stay in your current home? If your plans are to move in the next few years will you recoup the costs with a refinance?
Rate: The lending industry has used the 1% rule as a guideline for refinancing. Meaning that if you can drop your rate by 1% you should consider refinancing.
Here’s an example: If the cost to refinance would cost $4000 and your monthly payment would be reduced by $200 a month, you would recoup the cost in only 20 months!
Term: One great strategy is to refinance from a 30 year mortgage to a 15 year mortgage and reduce the time it would take to pay off your loan. People will often keep their monthly payment the same and be able to knock several years off the life of the loan.
PMI/MIP or Private Mortgage Insurance: Look at your monhtly mortgage statement and see if you are paying PMI. If you are, you might be able to petition to remove the PMI by showing you have 20-25% equity in your home. The cost of this typically the cost of a bank appraisal. We can help with a quick market valuation for your home.
If this information is helpful and got you thinking about potentially refinancing, please reach out and we are happy to give you a quick summary of all these aspects. We can also connect you with a trusted lender that will provide you with the right information to make a smart decision.