Homeowners should consider refinancing while mortgage rates are low. Refinancing involves some up-front fees but can result in smaller monthly expenses. It can take place with the current mortgage company that holds a mortgage or a completely different lender. The following you will find Newton MA homeowner mortgage refinance guidance including the expenses and benefits of refinancing.
Determining When to Refinance a Mortgage
The value of homes can affect your refinancing options. If real estate prices dropped from when you originally obtained your mortgage, this may make refinancing a bit complicated. Mortgage companies normally lend up to a certain percentage of the value of a home, which is determined by an appraisal. If your mortgage balance is higher than that mark, you may have to bring down your balance in order to refinance. FHA loan holders have the option of a streamline process that does not require an appraisal. There are also special options for home owners who are under water due to the decrease in market values. A local mortgage professional can help you assess these different options.
Interest Rate Change
The common guideline is to refinance when the difference in rates is at least one percent lower than your existing rate. The savings each month will make the up-front expenses of refinancing worthwhile. Also, some banks will not authorize a refinance unless the savings exceeds a certain amount.
Expenses and Other Factors
There are expenses associated with refinancing a mortgage. These include closing costs, bank fees, pre-paid interest, and mortgage insurance, just to name a few. The cost can differ depending on the bank and loan product. Understand these expenses before refinancing and compare it to the overall savings. Also remember that you will have a delay between when your current mortgage is paid off and the next one is due, so those funds can go towards your closing costs.
About Newton MA Homeowner Mortgage Refinance Guidance
On top of the Newton MA homeowner mortgage refinance guidance offered above, also factor in how long you intend to live in a property since the savings accumulates over several years. Interest rates are also affected by your personal finances and credit rating, so consult with a local mortgage officer for relevant facts. The advice above is only an overview and may not cover everything applicable to your home or specific finances.