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SHOULD I REFINANCE?
This question is asked over and over again, and their is no easy way of answering other than saying MAYBE. Because the answer depends on your individual circumstances, I often times may even disuade a borrower from refinancing unless it truly makes sense on paper. I will share with you the thought process behind each refinance decision. Once you are made aware of this, you can determine for yourself if it is in your best interest.
If you are probably going to be selling your home in the next 2 to 3 year time horizon, then it normally does not make sense to refinance as the charges associated with title, escrow, loan origination, processing, and underwriting normally can not be recouped in less than a 2 year timeframe.
However, if you are planning on staying in your home for longer than this period of time and there is a significant reduction in interest rate (let's say a 1% or more difference), then it normally makes sense to take the refinance plunge because of the continual savings the borrower will incur over the life of the loan can be astronomical. The borrower in this case will normally save somewhere from $100 to $400 or more a month on the interest rate reduction dependent on the loan amount, which equates to annual savings of $1200 to $4800 a year or more only to be multiplied by the number of years the property is held. The life of the loan savings could literally be in the hundreds of thousands of dollars.
Additionally, for borrowers who may currently have interest only payments at 6.00% or more, jumping into a principle and interest mortgage of 4.875% or lower may make sense as well. The security of locking in a principal and interest payment over an interest only payment in this low rate environment definately makes sense.
Use the mortgage calculator attached to my website or email to see what your savings should be with the lower rates on your principal balance, or contact us and we will be happy to assist you. We will give you an honest answer if a refinance is right for you!