It is most beneficial to refinance when interest rates remain low. Refinancing has certain expenses but may result in dramatic savings on monthly expenses. It may take place with the existing mortgage servicing company or an entirely different lender. MA Home Loan Refinance Information including the expenses and advantages of refinancing are included in this article.
Factors to Review Prior to Refinancing a Home
Real Estate Market Conditions
The price of properties can affect your refinancing options. If property values dropped from when you closed on your mortgage, this might make refinancing more complicated. Lenders normally lend up to a specific percentage of property values, based on an appraisal. If a mortgage balance exceeds that percentage, you may have to pay down your loan amount before a refinance. FHA mortgages (and some others) have the option of a streamline process that excludes appraisals. There are also programs for home owners under water because of declining property values. A local mortgage consultant will assist you with identifying various options.
Interest Rate Changes
The traditional practice is to refinance when the difference in rates is at least one percent below the existing interest rate on your loan. The lower payment each month will make the up-front costs of refinancing worthwhile. Additionally, some lenders will not authorize a refinance unless the savings is greater than a specific amount.
Expenses and Other Factors
Refinancing comes at a cost. Examples are closing costs, lender fees, pre-paid interest, and mortgage insurance, just to name a few. The total cost may differ depending on the bank and type of loan. Request an estimate prior to refinancing and compare it to the overall savings. Also note that you will typically go one month without a mortgage payment, so those funds may be used for your closing costs.
MA Home Loan Refinance Information
Beyond the MA home loan refinance information offered above, consider how long you intend to own a residence since the savings may only be worthwhile over many years. Mortgage terms are also influenced by your credit rating, so get advice from a local mortgage officer for particular information. The advice above is only an overview and does not cover things specific to your property or your finances.