Primelending Chad Baker
How To Decide If It's Time To Re-Finance Your Mortgage
As mortgage interest rates go down, you may be considering refinancing your loan. Refinancing can secure a lower interest rate, meaning that you'll be able to make lower monthly mortgage payments. Some home owners also choose to use refinancing as a way to get cash by taking out a new loan for more than they currently owe on the house. However, there is a cost to refinancing, and it may not be worthwhile for everyone.
Conventional advice states that refinancing is only a good idea if you can lower your interest rate by a full percent. However, in reality, even a quarter of a percent can make a significant difference if you have the time to break even. You can find the break-even point by dividing the total closing costs by the amount of money you'll save per month. The result will be the number of months before you break even. For example, if your closing costs are $5,000 and you'll save $200 on your monthly payments, it will be 25 months before you break even. If you're planning to sell your house in the next couple of years, then refinancing may not be a good option for you because you won't have time to benefit from it.
It's also important to consider the term of the new loan when you refinance. If you're currently paying a 30-year loan and you take out a new 30-year loan at a lower rate, you will likely end up paying more in the long run. However, if you reduce the term to the amount of time that remains on your current loan, then you can save money. There are mortgage calculators online that will help you figure out the best combination of interest rates and terms and monthly payments.
Experts advise taking some time to gather paperwork like pay stubs, tax statements, bank statements, and evidence of any other assets you own. Lenders are becoming more strict in terms of the documentation they require, so be prepared; you may be asked to provide more paperwork than you expect. For more advice about refinancing your home, contact Primelending Chad Baker, and visit the following websites for further information: https://sandiegopurchaseloans.com/about/ https://sandiegopurchaseloans.com/ sandiegopurchaseloans.com www.sandiegopurchaseloans.com