Is now the right time to refinance?

If you own a home there’s a good chance at one point in time you asked yourself “Is now the right time to refinance?”.  It’s an excellent question and a lot depends on your current rate/term along with your purpose for doing a refinance.  If you’re not looking for cash out or to change your term from a 30 year fixed to a 15 year fixed then here is a “general” rule to follow:  If you have the opportunity to lower your current rate by .50% or more with no points; then it’s worth a consideration.

Are there times where you need more or maybe less of a change?  Absolutely; the .50% reduction is only a “general” rule to follow.  For example; let’s say you just closed on your purchase, you have a loan amount of $375,000.00 and a Mortgage Loan Applicationfew months later rates are 0.375% lower with no points and very little closing costs. You currently have a 30 year fixed and you are looking to get in to another 30 year fixed.  

Furthermore this is your “dream home” and you plan on staying in the home at least 10-20 years….so does it make sense to refinance?  I think so; you’ll save thousands in interest over he 10-20 years and to do the loan will cost you very little.  Besides you probably have everything ready to send in since you just completed the purchase.

If you are considering a refinance and would like a no cost – no obligation quote please be sure to contact us directly at 1-800-550-5538.  We offer both fixed rate mortgages and adjustable rate mortgages along with top notch customer service and a high rating with the Better Business Bureau.
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As far as a process to determine if now is a good time to refinance; here is how I suggest a homeowner determine if it’s a good time to refinance.  When a homeowners consider a refinance they first should clearly understand their current rate/term before doing anything else.  Second; try and locate your previous closing statement to determine if you paid points and if you paid any closing costs.  Why is this important?  Because if you paid points on your current loan and let’s say you’re looking to refinance a few years later; you probably want to avoid paying points again because of the added costs you paid previously.  Or let’s say you didn’t pay points last time and now you’ve been offered a really good rate but it comes with a point.  

Knowing clearly you didn’t pay points in your previous transaction might make your decision easier.  So understanding your current rate and the costs you paid with your previous transaction are the first steps to answering the question: “Is now the right time to refinance?”.

The next step is to determine the purpose of your refinance: is it to obtain lower rate?  Do you want to move from a 30 to a 15 year fixed rate mortgage?  Is it to get cash out to fix up the house?  What ever the reason may be make sure it’s clear so that you have a good understanding of your objective.  The next step is to get the quotes!  

Getting a mortgage quote can be fairly easy if you have the first three steps down.  When you call to get these quotes try and have an idea of what loan program (30 year fixed, 15 year fixed, 5/1 ARM etc) you want and be open to other possible solutions.  Try and get 2-4 quotes from reputable mortgage companies with a high rating at the Better Business Bureau.

Now that you have your quotes take some time to evaluate your options before making a final decision.  Do any of the quotes meet your goals?  Also make sure you’re comparing apples to apples when comparing mortgage quotes.  Not only ask for the “rate” but you also want to ask for “total fees; for everything including points”.  The reason is that some loan officers avoid talking about “total fees; for everything including points” because they want hide the true cost of the loan.  So that one great quote; the one that’s 0.25% below everyone else – make sure you ask what are the total fees including points to make sure you have a clear understanding of what the loan costs.  And ask questions!  A reputable mortgage company; one with a high rating at the Better Business Bureau, will be happy to answer any questions you may have.

If you are considering a refinance and would like a no cost – no obligation quote please be sure to contact us directly at 1-800-550-5538.  We offer both fixed rate mortgages and adjustable rate mortgages along with top notch customer service and a high rating with the Better Business Bureau.