Refinancing your home depends on many factors, and in some cases it is a wise decision.
Because you already own the property, refinancing is easier than securing a loan as a first-time buyer, but the number of years you will owe on your mortgage may increase.
If your current interest rate is 1% or more higher than the rate you want, refinancing makes sense. Also, if your loan term is 15 years, refinancing can shorten the term.
For a falling-interest-rate environment, an adjustable-rate mortgage is a good choice. For a rising-interest-rate environment, converting to a fixed-rate mortgage makes more sense.
In order to reduce your monthly payments, you must cover all the closing costs involved in the refinancing, including lawyer fees, an appraisal, taxes and any mortgage penalties.
If interest rates fall, your monthly payments could drop from $1,257 to $1,130, saving you $127 per month or $1,524 annually.
A lender can calculate your total closing costs for a refinance. If you plan to stay in your home for one-and-a-half years or longer, refinancing makes sense.
It really helped when you said that mortgage refinancing will make sense when the current interest rate is 1% higher or more compared to what we want. I will share this information with my best friend, because she has been thinking about her home and how it has been hard for her lately. She has financial issues due to some unexpected circumstances in her life which is why it might be a good option for her to refinance instead.
It was interesting to know that a lender can estimate your overall closing costs for a refinance. My friend wants to opt for mortgage refinancing. I should advise her to turn to a firm that provides mortgage refinancing solutions.
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By: Sarah Colucci
Senior Mortgage Agent, Lic. M14000929