Q: When is the best time to refinance?
A: Many people flock to refinance while mortgage interest rates are low,
particularly when rates are about two percentage points below their existing
home loans.
Other factors, like when to finance, will depend on how long you plan to hold
on to your home and whether you have to pay considerable fees to refinance. It
also will depend on how far along you are in paying off your current mortgage.
If you expect to sell your home relatively soon, you are not likely to recoup
the costs you incurred to refinance. And if you are more than halfway through
paying your current mortgage, you probably will gain little by refinancing.
However, if you are going to own your home for at least another five years, that
is probably long enough to recoup any refinancing costs and realize real savings
as a result of lowering your monthly payment.
In fact, if it costs you nothing to refinance, you can gain even more. Many
lenders will let you roll the costs of the refinancing into the new note and
still reduce the amount of the monthly payment. Plus, there are no-cost
refinancing deals available.
Contact your lender, and its competitors, before you refinance.
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