Thursday, January 19, 2012

Time to Refinance!

If you haven't looked at refinancing in the past year you should. A general rule of thumb is that if you can lower your interest rate by 1% it is worth refinancing. 30 year fixed rates are at 3.875% so most people can lower their rate by at LEAST 1%.

There are two basic things you are going to need to refinance:
1. Equity in your home. How much equity you need depends on the type of loan you are getting. Curious about how much your home is worth? Send me an email, give me a call or fill out the form here.
2. Good credit scores. You do need good credit scores to refinance but you do not need perfect credit scores. A quick check of your scores on any of the credit score websites, like this one will help you determine if you are ready to refinance or if you need to do some work on your credit score first.

Not convinced it is worth your time? If you have a $300,000, 30 year fixed mortgage at 6% your payment (before taxes and insurance) would be $1,799. That same mortgage at 3.875% would be $1,411 per month. That is a huge savings.

Remember, when you refinance you are starting your loan period over. If you have paid on your 30 year mortgage for 5 years you will be starting over at year 1. I would encourage you to consider reducing the term of your loan (a 20 or 15 year mortgage) when you refinance.

There is a lot to consider when you are looking at a refinance. If you want more information about home values give me a call. If you want more information about loan programs I would encourage you to call one of the lenders listed here.

"Recent upgrades to existing loan programs allow up to 125% Loan to Value, depending on who services your current loan (Fannie Mae, Freddie Mac, or FHA) Most refinances can be executed with no cash out of pocket or increase to your loan amount. If your current rate is 4.75% or higher, and you intend to stay in your home for 2 or more years, then it makes sense to act now. The process can be completed in under 3 weeks and the documentation required and time invested on your part is minimal. Most experts predict the 30 year fixed rate to be increase about 1% in the coming year."
                        -Matt Bench, Benchview Lending (Matt is one of my favorite lenders and people!)

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